The Bank of Israel has decided to keep its benchmark interest rate steady at 4.5% for the 11th consecutive time. Despite steady economic growth, rising consumer prices have prompted the central bank to maintain a cautious stance. The decision signals continued high borrowing costs for homebuyers and investors, with potential rate cuts postponed until inflation shows sustained moderation.

In a widely anticipated move, the Bank of Israel announced today that it will leave its benchmark interest rate unchanged at 4.5%, marking the 11th consecutive decision to hold steady. The central bank’s Monetary Committee cited elevated inflation and ongoing geopolitical instability as key factors behind the decision.

Despite signs of economic resilience — Israel’s GDP grew by 3.4% in the first quarter of 2025 — concerns over inflation have intensified. The annual inflation rate unexpectedly rose to 3.6% in April, exceeding the government’s 1%–3% target range. Increases in housing, transportation, and food prices, partly driven by wartime disruptions and global supply chain pressures, have complicated the path forward.

Since the outbreak of war in October, the central bank has walked a fine line: aiming to support economic activity while containing inflationary pressures. With consumer prices once again on the rise and no clear end in sight to regional instability, the Bank has opted to stay the course.

Looking ahead, policymakers indicated that rate cuts remain on the table for later in the year—but only if inflation shows sustained moderation and financial markets stabilize. For now, the message is clear: caution prevails.

For homebuyers and investors in Israel’s property market, this decision signals continued high borrowing costs, particularly for mortgages indexed to the prime rate. While a cut may still come in 2025, today’s announcement confirms that the wait isn’t over yet.