Bank of Israel Decides to Lower Interest Rate to 4.25%

SadaNews - The Bank of Israel announced today, Monday, a reduction in the interest rate by a quarter of a percentage point, marking the first decrease since January 1, 2024, bringing the rate down to 4.25%. The "Prime" interest rate will decrease to 5.75%. The bank clarified that the new rate will take effect next Thursday, allowing banks time to implement the change.

This decision comes amid a decline in inflation to 2.5%, within the target range of 1% to 3%, with expectations of negative indicators appearing in the remaining two months of 2025. Meanwhile, the government is working on preparing next year's budget, with estimates suggesting it could be approved in March.

According to estimates, the reduction in interest rates will lead to a decrease in annual installments for borrowers ranging between 720 shekels and 2,300 shekels, depending on the type of loan and repayment period. The savings for homeowners with mortgages extending over 25 years could range between 21,000 and 39,000 shekels, even with a limited reduction of just a quarter of a percentage point.