The Bank of Israel cut its benchmark interest rate by 25 basis points to 4.25% on 24 November 2025, resuming its easing path after a pause of almost two years. It was the first rate reduction since January 2024.
Annual inflation in Israel was 2.5% in October, within the 1%–3% target range for a second consecutive month, and the bank pointed to the stability of the economy, a somewhat stabilising geopolitical situation and a substantial decline in Israel's risk premium as reasons for the move.
FIRST CUT SINCE JANUARY 2024
The Committee held rates steady through much of 2024 and into 2025.
The Committee said future adjustments would be conditional on continued progress on prices and on the broader economic and geopolitical outlook.
The bank pointed to a somewhat stabilising geopolitical situation after the Gaza ceasefire of 10 October 2025, and to a fall in Israel's risk premium after the 12-day war with Iran in June.
INFLATION OUTLOOK
The bank's statement pointed to an improving inflation outlook.