Israeli central bank leaves interest rate unchanged at 4.5%

By Tuba Ongun

The Bank of Israel decided to keep the interest rate constant at 4.5% for a fourth straight meeting, according to a statement on Monday.

The recovery of economic activity moderated in the second quarter of 2024 amid supply constraints led by Tel Aviv's onslaught against the Gaza Strip.

The extent of continued geopolitical uncertainty is reflected in the economy’s high risk premium, said the statement.

Since its May monetary policy meeting, the local currency shekel weakened 1.3% against the dollar and the euro, it stressed.

The bank said it expects GDP in Israel to rise 1.5% this year and 4.2% next year, a downward revision of 1.3 percentage points compared to April projections.

In 2023, Israel's economy grew 2.0% following 6.5% the prior year.

The ongoing war, which started last October, caused the Israeli economy to contract 19.4% in the last quarter of 2023.