Bank of Israel Governor Prof. Amir Yaron hinted that there will be no interest rate cut next month. In an interview with Bloomberg Television, Yaron said that the next interest rate decision, at the beginning of September, will be based on real-time data. The Bank of Israel interest rate is currently at 3.5%, after two consecutive cuts. In July, the bank estimated that in the base scenario, the interest rate could reach 3% within a year. However, according to Yaron, uncertainty has increased since the previous interest rate decision, and the committee members will now have to take into account the state of the job market, inflation, geopolitical risks and fiscal risks.
While annual inflation fell to only 1.5% in July, Yaron does not see this low level remaining for long. He said, "I expect it to accelerate to 2% in the coming months" - the middle level of the government’s annual inflation target.
On the other hand, the state of the Israeli economy gives the central bank reason to consider further easing. Yaron noted that growth in the second quarter was "very strong," and emphasized the resilience of the economy despite the war and uncertainty. Yaron also addressed the economic challenge that will be placed before the government that will be formed after the October elections. He said that the government will have to return the public debt to a downward path, while continuing defense spending and investing in growth engines. "Managing all three of these is going to be difficult," he said.
Published by Globes, Israel business news - en.globes.co.il - on August 19, 2026.
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