Israel's Bank Keeps Interest Rate at 4%

SadaNews - The Bank of Israel announced today, Monday, that the banking interest rate will remain at 4% for the next six weeks, in line with the expectations of most economic experts.

The decision by the Bank of Israel comes in the wake of the Knesset's approval of the state budget for the year 2026 last night, alongside growing concerns over the ongoing war with Iran, the sharp rise in energy prices, and fuel costs. It is expected that the price of a liter of gasoline will exceed 8 shekels after midnight between Tuesday and Wednesday.

Following interest rate cuts in November and January, the central reason for not cutting it again is the fear of the inflation rate rising from the current 2% to around 3%. This figure constitutes the upper limit of inflation set by the Israeli government, following the anticipated increase in fuel, transportation, industry, and aviation prices.

The Bank of Israel's decision was also influenced by geopolitical uncertainty, rising demand alongside supply constraints, and the disruption of the education system for a whole month, which affects the labor market.