Israel Interest Rate

The Bank of Israel kept the policy rate unchanged at 4.5% on August 28th 2024 for the fifth consecutive meeting. Inflation has been trending upward in recent months, with the Consumer Price Index (CPI) recording increases of 0.1% in June and 0.6% in July, pushing the annual inflation rate to 3.2%, slightly exceeding the central bank's target range. Projections indicate that inflation is likely to remain above the target range in the coming months, driven by several factors including ongoing geopolitical uncertainties, the potential for further depreciation of the shekel, and persistent supply constraints. Meanwhile, GDP expanded by just 0.3% in the second quarter of 2024, translating to an annual growth rate of 1.2%, which is below the trend line and lower than the corresponding period in 2023. Given these challenges, the central bank opted to maintain the current interest rate to balance the need to control inflation while supporting economic growth.