2026.03.3013:30:30UTC+00Central Bank Israel Leaves Rates Steady

The Bank of Israel kept its key interest rate unchanged at 4% at its March 2026 meeting, in line with market expectations. The decision cited a rise in the inflation environment, driven primarily by a sharp increase in global energy prices.

Policymakers noted that since the onset of Operation “Roaring Lion,” geopolitical uncertainty has intensified both in Israel and worldwide, especially regarding the expected duration and severity of the fighting, as well as the manner in which it will conclude.

The central bank also updated its macroeconomic projections. In its baseline scenario, it assumes that Operation Roaring Lion and the hostilities in Lebanon will end toward the close of April, and that the direct economic impact of the military operation will persist as long as the fighting continues.

Under this scenario, GDP is projected to grow by 3.8% in 2026 and 5.5% in 2027, compared with the January forecast of 5.2% and 4.3%, respectively. The inflation rate is now expected to reach 2.2% in 2026 and 1.8% in 2027.