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2026-05-25 21:02:39
[Israel's Central Bank Resumes Rate Cuts, Benchmark Rate Lowered by 25 Basis Points to 3.75%, Inflation Remains Under Control] ⑴ The Bank of Israel cut its short-term interest rate by 25 basis points to 3.75% on Monday, marking its third rate cut in six months, in line with market expectations. ⑵ The bank had previously cut rates in November and January, but subsequently held rates steady due to the conflict with Iran and concerns about soaring supply-driven inflation. ⑶ Data shows that the annualized inflation rate in April remained stable at 1.9%, within the target range of 1% to 3%. Despite the US-Israel airstrikes on Iran on February 28 and the fragile ceasefire agreement reached on April 8, inflation has not spiraled out of control. ⑷ From a trading psychology perspective, the Bank of Israel's decision to ease monetary policy amidst ongoing regional conflict and a fragile ceasefire indicates that policymakers prefer to use interest rate tools to support economic activity rather than being overly concerned about the secondary transmission of geopolitical risks to prices. Meanwhile, the shekel's position against the US dollar at a 30-year high also provides a buffer for the central bank's rate cuts.
