Bank of Israel seen resuming rate reductions next week with 25 bps cut - Reuters poll

JERUSALEM - The Bank of Israel is expected to resume interest rate cuts next week after a brief pause, due to stable inflation, a strong shekel and a ceasefire with Iran that has held for more than a month, a Reuters poll on Wednesday showed.

• The central bank will decide on short-term rates on Monday at 4 p.m. (1300 GMT).

• 10 of 13 economists polled by Reuters forecast a 25 bps reduction in the benchmark rate to 3.75%.

• Three economists expect the rate to stay at 4.0%.

• Annual inflation held steady at 1.9% in April, within the government's 1-3% annual target.

• Market expectations see the rate at 1.7% in a year's time.

• Due to the 40-day war with Iran, GDP shrank an annualised 3.3% in the first quarter.

• The dollar-shekel rate of 2.92 is near a 33-year low of 2.89 reached on Tuesday.

• The budget deficit declining to 3.8% of GDP in April is also cited as a factor to ease policy.

• U.S. and Israeli airstrikes on Iran began on February 28 and a ceasefire halted the fighting on April 8.

• The U.S. has warned of a return to fighting should Iran not give up its nuclear programme and some economists cite this as a reason for the central bank to hold rates this month.

• The Bank of Israel's staff forecasts two rate cuts by early 2027 and economic growth of 3.8% in 2026.

• It cut rates in November and January but held them in February and March.

(Reporting by Steven Scheer. Editing by Mark Potter)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 20, 2026 at 4:35 AM.