FX.co ★ Bank of Israel Keeps Key Rate Steady at 4.5%

The Bank of Israel has decided to maintain its benchmark interest rate at 4.5% for the twelfth consecutive meeting, as of July 7, 2025, aligning with market expectations. This decision signals a cautiously positive perspective as the economy gradually recovers, with GDP experiencing a 3.7% annualized growth in the first quarter—a figure closely aligning with the Bank's 2025 forecast of 3.3% growth. Although annual inflation declined to 3.1% in May, it remains above the target range's upper limit. The labor market continues to display tight conditions, reflected in the persistently high ratio of job vacancies to unemployed individuals. Since the last rate decision, the shekel has seen significant appreciation against both the dollar and the euro. The Bank of Israel emphasized its commitment to closely observing trends in inflation, financial market stability, and general economic activity to inform future monetary policy decisions, especially amid ongoing substantial geopolitical uncertainties on both national and global levels.