Bank of Israel leaves interest rate unchanged at 4%; Finance Minister Attacks

The Monetary Committee of the Bank of Israel decided to keep the interest rate at 4%, after it had been reduced in January for the second consecutive time.

The decision was made despite inflation moderating significantly to 1.8% last month, partly against the backdrop of tensions between the United States and Iran.

Up until December, there had been 14 interest rate decisions in which the Monetary Committee chose not to change the rate. The background to those decisions was the fact that inflation had fallen below the upper target, even after the rate cut in November.

Finance Minister Bezalel Smotrich attacked the decision. “The governor’s decision to keep the interest rate high is a mistaken decision that is not supported by the macroeconomic data of the Israeli economy. The shekel is strong, inflation is weakening, and we are well within the target range. The central challenge today is growth, and the need is to ease the burden on Israeli citizens, households, mortgage holders, and small and medium-sized businesses. Credit is choking the economy and delaying recovery.”

He added, “This is the time to move toward growth and give a significant boost to economic activity. There is currently no inflationary risk that justifies such a restrictive monetary policy. I call on the governor to reverse his decision and continue the trend of lowering interest rates. That is what is right for the economy, what is right for the market, and what is right for the citizens of the State of Israel and the fight against the cost of living.”