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ISRAEL: Central Bank Expected To Keep Base Rate Unchanged Today

ISRAEL
EM BulletBulletEmerging Market NewsMiddle East

The Bank of Israel (BoI) is expected to keep the base rate unchanged at 4.50% later today, with the decision set to be announced at 14:00GMT/16:00IST. There was just one dissenter in Bloomberg's poll of analysts calling for a 25bp rate cut.

  • Bank of New York Mellon noted that the BoI will "continue to find it difficult to reference easing in the current environment, especially with expenditures still  at very elevated levels" as "the 2025 deficit is expected to remain above 5% of GDP this year, well above the government target even accounting for the special reserve allocation." They believe that the changing US rate outlook has constrained the room for adjustment for the BoI in the near term.
  • Goldman Sachs expect the BoI to stay on hold today, noting that "the main developments since the November MPC have been the reduction of hostilities in Lebanon and a below-consensus inflation print in December, which are both incrementally dovish." They remind that despite this, "BoI Governor Amir Yaron ruled out cuts in the near term." Goldman believe that the BoI "will emphasise the need for the government to finally pass a (sufficiently fiscally prudent) budget and that more conclusive evidence of inflation moderating is required before a cutting cycle recommences." They expect the BoI to "maintain its forecast for the cutting cycle to recommence only in Q3."
  • JP Morgan wrote that while the central bank will likely stand pat on rates, "the discussion will evidently move in a more dovish direction, as the ILS has strengthened, recent inflation prints have been constructive, while geopolitical risk premia moderated." They expect 50bp worth of cuts in 2H2025 but believe that risks are "increasingly skewed toward earlier start and deeper easing cycle in Israel."
  • USD/ILS trades marginally lower on the session at 3.6403 at typing. The TA-35 Index has added 0.5%, refreshing cyclical highs.
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The Bank of Israel (BoI) is expected to keep the base rate unchanged at 4.50% later today, with the decision set to be announced at 14:00GMT/16:00IST. There was just one dissenter in Bloomberg's poll of analysts calling for a 25bp rate cut.

  • Bank of New York Mellon noted that the BoI will "continue to find it difficult to reference easing in the current environment, especially with expenditures still  at very elevated levels" as "the 2025 deficit is expected to remain above 5% of GDP this year, well above the government target even accounting for the special reserve allocation." They believe that the changing US rate outlook has constrained the room for adjustment for the BoI in the near term.
  • Goldman Sachs expect the BoI to stay on hold today, noting that "the main developments since the November MPC have been the reduction of hostilities in Lebanon and a below-consensus inflation print in December, which are both incrementally dovish." They remind that despite this, "BoI Governor Amir Yaron ruled out cuts in the near term." Goldman believe that the BoI "will emphasise the need for the government to finally pass a (sufficiently fiscally prudent) budget and that more conclusive evidence of inflation moderating is required before a cutting cycle recommences." They expect the BoI to "maintain its forecast for the cutting cycle to recommence only in Q3."
  • JP Morgan wrote that while the central bank will likely stand pat on rates, "the discussion will evidently move in a more dovish direction, as the ILS has strengthened, recent inflation prints have been constructive, while geopolitical risk premia moderated." They expect 50bp worth of cuts in 2H2025 but believe that risks are "increasingly skewed toward earlier start and deeper easing cycle in Israel."
  • USD/ILS trades marginally lower on the session at 3.6403 at typing. The TA-35 Index has added 0.5%, refreshing cyclical highs.