Bank of Israel Holds Steady in Wartime Economic Uncertainty

The Bank of Israel has decided to keep interest rates unchanged amid ongoing conflicts with Hamas and Hezbollah, citing concerns over rising inflation and economic slowdown. Despite analysts' expectations, the central bank maintained a 4.5% rate to stabilize markets, focusing on price stability and supporting economic activity.

The Bank of Israel maintained its interest rates once again, marking the sixth consecutive meeting to do so. This decision comes as Israel navigates a prolonged conflict with Hamas in Gaza and hostilities with Hezbollah in Lebanon, further straining the nation's economic stability.

In a statement, the central bank emphasized its ongoing efforts to stabilize the markets amid the turmoil. The investor risk premium for Israel has increased, prompting the bank to focus on measures to stabilize the market, reduce uncertainty, and support economic performance, despite slashing growth forecasts.

The research department revised Israel's economic growth forecast for the year to 0.5%, down from 1.5%, with second quarter growth having slowed dramatically. Inflation concerns persist, as annual rates rose to 3.6% in August, prompting an upward revision in the inflation forecast for the coming year to 3.2%.

(With inputs from agencies.)