Jerusalem, 30 March, 2026 (TPS-IL) — The Monetary Committee of the Bank of Israel decided today, March 30, 2026, to leave the Interest Rate unchanged at 4.00%.
The Bank explained the decision by pointing out that since the beginning of the War With Iran, geopolitical uncertainty has grown both domestically and globally, particularly with regard to the expected duration and intensity of the fighting and how it will end. Also, since the previous interest rate decision, there has been an increase in the inflation environment, mainly due to a marked increase in global energy prices.
The response of the financial variables, including the risk premium, the exchange rate, and equity prices, to the conflict has so far been relatively moderate. Over the reviewed period, the Shekel weakened by 0.8% against the US Dollar and strengthened by 1.4% against the Euro.
The military operation has broad economic implications for real economic activity. Credit card purchase data in current prices indicate that, similar to the previous campaign against Iran, there was a sharp decline of about 20% in activity at the beginning of the campaign. The data show a partial recovery after the first two weeks of the campaign.
The labor market remains tight and the pace of wage increases in the business sector rose to 4.7% in November–January.
According to the Research Department forecast, which was formulated under the assumption that the war with Iran and the fighting in Lebanon will end toward the end of April, GDP is expected to grow by 3.8% in 2026 and by 5.5% in 2027, compared with 5.2% and 4.3%, respectively, in the January forecast.
The budget deficit is expected to be 5.3% of GDP in 2026 and 4.4% of GDP in 2027, and the debt-to-GDP ratio is expected to be about 70.5% of GDP in 2026 and at the end of 2027.