> ## Content Index
> Fetch the complete content index at: https://www.theglobalbanker.com/llms.txt
> Use this file to discover other available public pages before exploring further.

# Bank of Israel Cuts Policy Rate by 25bp to 4.00% in Surprise Decision
- URL: https://www.theglobalbanker.com/bank-of-israel-cuts-policy-rate-25bp-4-00-percent-unanimous-mpc/
- Published: 2026-01-05T14:15:00.000Z
- Updated: 2026-10-24T14:38:47.000Z
- Description: The Bank of Israel's Monetary Committee voted to reduce the policy rate from 4.25% to 4.00%, the second consecutive cut, as inflation fell to 2.4% annually.
- Author: TGB Editorial Team
- Tags: Central Banks, MENA, #archive

The Bank of Israel reduced its benchmark policy rate by 25 basis points to 4.00% on 5 January 2026, a move most economists had not expected. The decision was the second consecutive reduction in the policy rate.

The latest move came against a backdrop of easing price pressures, with consumer prices in November 2025 declining 0.5% on a monthly basis and the annual inflation rate falling to 2.4%, placing it within the Bank of Israel's target range of 1 to 3 per cent. 

#### INFLATION AND RATE FORECAST

At 4.00%, the policy rate remains above annual inflation of 2.4%. The Bank of Israel's Research Department forecast that the policy rate would fall to 3.5% by the end of 2026, assuming a stable geopolitical environment and a sound fiscal situation.