Bank of Israel keeps rate unchanged, cuts growth forecast

The Bank of Israel has issued revised forecasts for GDP growth, the budget deficit and debt-to-GDP growth, based on the assumption that the war will end toward the end of April.

The Bank of Israel Monetary Committee, headed by Governor Prof. Amir Yaron, has kept the interest rate unchanged at 4%, as expected, due to the war and the ongoing geopolitical uncertainty. The Bank of Israel kept the rate unchanged last month amid war concerns but had made two consecutive cuts of 0.25% at each of its previous two meetings in November and January. The Bank of Israel also noted “An increase in the inflation environment, mainly due to a marked increase in global energy prices.”

Chief economist cuts growth forecast

According to the revised Bank of Israel research department forecast, which was formulated under the assumption that Operation Roaring Lion 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.

This GDP growth forecast is in line with the Ministry of Finance chief economist, who this morning cut the 2026 forecast to 3.8%, if the war ends in April.

Published by Globes, Israel business news – en.globes.co.il – on March 30, 2026.