Central Bank maintains rates in July

At its meeting on 8 July, the Central Bank decided to leave the interest rate unchanged at 4.50%.

The Bank likely judged that it was premature to begin cutting rates, given that the shekel weakened since the prior meeting and that both inflation and one-year inflation expectations are around the upper bound of the target range. On the flipside, hiking rates was not warranted either, as the economic recovery moderated in the second quarter and inflation is still within the Bank of Israel’s 1.0–3.0% target range.

The Central Bank’s own internal forecasts are for the policy rate to average at 4.25% in Q2 2025, implying only minor monetary easing over the next year. Our Consensus is slightly more dovish: Most panelists see further rate cuts later in 2024, though several now see rates on hold given persistent price pressures.

On the outlook, EIU analysts said: “Ongoing currency volatility and its impact on inflation, coupled with signs that major central banks face renewed inflation concerns, mean that we expect only marginal further easing from the BOI in 2024. As inflation returns firmly to within the 13% target range, the policy rate will be cut further but will not return to its earlier lows before 2028.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Israeli interest rate projections for the next ten years from a panel of 9 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Israeli interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Israeli interest rate projections.

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