Bank of Israel Cuts Interest Rate to 3.25%

The Bank of Israel’s Monetary Committee lowered the policy interest rate to 3.25%, citing annual inflation of 1.5% in July, below the midpoint of its target range. The Bank said second-quarter GDP grew 15.4% at an annualized rate and stood 6.2% above the fourth quarter of 2025, while business output was 7.4% higher. Prime-age employment was 78.9% and broad unemployment was 3.2%; home prices fell 1.5% over the year, while July mortgage borrowing was about NIS 10 billion. The Bank said future decisions will depend on inflation, economic activity, geopolitical uncertainty and fiscal developments.