JERUSALEM, May 20 (Reuters) – 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)
