The Bank of Israel lowers interest rates for a fourth time this year to 3.25 percent, citing an economy recovering from the war with Iran, a moderation in the inflation environment, and a stable local currency.
At its last decision in July, the central bank reduced borrowing costs from 3.75% to 3.5%, after trimming rates in May and January.
“National accounts figures for the second quarter partly reflect recovery of the economy from the impact of the military operation against Iran,” the central bank says. “Uncertainty remains high in view of the geopolitical tensions.”
“However, during the reviewed period, Israel’s risk premium remained at levels similar to those prior to October 7, 2023, and the exchange rate remained virtually unchanged,” the central bank adds.
Ahead of the central bank’s decision, forecasters were split over whether the central bank, led by Governor Amir Yaron, would lower borrowing costs or take a cautious approach and pause rate cuts.
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Tuesday, September 1, 2026
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