The Bank of Israel kept its interest rate unchanged at 4.5% on Wednesday.
The bank cited a number of factors in its decision, including geopolitical uncertainty, which the bank said has increased in recent months, and fiscal uncertainty.
These uncertainties are reflected, among other indicators, in the large gap between yields on Israel’s government bonds and US bonds, the bank said.
It also cited inflation as part of its decision to hold the interest rate steady, saying inflation has been increasing in recent months and is slightly above the target range.
The predictions for inflation are that the yearly inflation rate will remain above the target range, and inflation will continue to increase in early 2025, said the bank. It will moderate to around the top of the range in mid-2025, it added.