The Bank of Israel has decided to keep the discount rate at 4.5% and the prime interest rate at 6% for the next six weeks. This announcement comes as a result of various challenges, including the tense situation on the Lebanese border, ongoing Iron Swords war with active hostilities in Rafah, and a government budget deficit that has exceeded expectations at over 7%.
Due to these factors, the Bank of Israel is taking a cautious approach to monetary policy by not risking reducing the discount rate at this time. Additionally, there are concerns about the potential increase in the price index in May and June, which is also impacting the forecasts of Bank of Israel specialists.
Considering the current economic and geopolitical landscape, the Bank of Israel is adopting a conservative approach to monetary policy to ensure stability in an uncertain environment. While future adjustments may depend on how the situation evolves, for now, rates will remain unchanged.
