Bank of Israel cuts rate to 4%. GDP could grow 5.2% this year. New TASE volume record | TV10 Israel Daily
Re: January 5, 2026 in Israel - and what it all means for investors at home and abroad.
Quick take:
Borrowing costs just fell to a two-year low. The Bank of Israel cut interest rates to 4% today, the second consecutive reduction, signaling the economy is pivoting from defense to offense. Markets responded with force: the TA-35 surged 1.16%, the TA-90 jumped 3.03%, and trading volume hit a record ₪5.89B for a Monday.
In the corporate sector, checkbooks are wide open. If there’s a theme to the first Monday of 2026, it’s consolidation. From a Big Four accounting firm snapping up a boutique strategy shop to a food giant expanding its portfolio, Israeli market leaders are buying growth today.
Macro | Bank of Israel cuts rate to 4% as “war discount” evaporates
The Bank of Israel lowered the interest rate by 25 basis points today to 4%, the second consecutive reduction. The Monetary Committee cited three factors:
Inflation under control: Annual inflation sits at 2.4% (within target range), with November CPI falling 0.5%.
Currency strength: The shekel rallied 3.1% against the dollar and 1.5% against the euro since the last decision.
Real estate cooling: Home prices continue sliding, with transaction volumes low, reducing housing bubble risk.
The Bank’s research division projects 5.2% GDP growth for 2026 (up from an estimated 2.8% in 2025) and expects inflation to dip to 1.7%. In a closely-watched press conference, Governor Prof. Amir Yaron stated: “Israel’s risk premium is currently at a level close to that of the pre-war period.” The “war discount” on Israeli assets is evaporating. The central bank is looking to see the economy move from crisis management to rapid expansion.
Defense | gloves off
Two developments signal the defense sector is accelerating:
IAI resolves 7-year salary dispute: State-owned Israel Aerospace Industries finally resolved “salary irregularities” with the Ministry of Finance. Being state-owned in Israel typically means bureaucratic constraints on compensation. IAI has effectively removed these handcuffs, allowing competitive wages and bonuses crucial for attracting engineering talent.
Elbit Systems (TASE: ESLT) locks $150M in European contracts: Elbit secured another $150M to equip European military fleets (including NATO members) with DIRCM protection systems. This follows a $757M Greek deal and $210M IDF tank upgrade. The thesis: Europe is re-arming, and Elbit is the preferred supplier.
M&A Monday | Sugat buys Filtuna, R.G.A. expands
Sugat goes fishing
Fresh off its IPO, Sugat (TASE: SUGT) deployed ₪55M to acquire 100% of Filtuna, a private canned tuna manufacturer. The logic: leverage Sugat’s massive logistics network. Adding tuna to trucks already carrying sugar and rice costs marginally nothing, a classic efficiency play.
R.G.A. cleans up nicely
R.G.A. Service & Cleaning (TASE: RGAS) acquired an undisclosed sanitation competitor for ₪72M, projecting a 43% boost in pre-tax profit by 2026. Consolidating the fragmented municipal waste market delivers immediate economies of scale, fewer trucks on the same routes means better margins.
EY acquires YS Consulting, bolsters management arm
Accounting giant EY acquired YS Consulting to strengthen its Strategy & Execution group (EYP). YS brings deep operational expertise with Israeli heavyweights including Teva, Shufersal, and Amdocs.
This marks EY Israel’s second major acquisition recently (following Compvision). The Big Four are moving beyond auditing books to writing strategy. By buying YS, EY gains immediate C-suite access at Israel’s largest public companies.
TASE snapshot for Monday, Jan. 5, 2026
TA-35 Index (TASE:TA35): 🟢 +1.16%
TA-90 (TASE:TA90): 🟢 +3.03%
TA-125 (TASE:TA125): 🟢 +1.64%
That’s our Monday here in Israel 🎉
If you enjoyed this update, please forward it to a friend.
TV10 Global | Israel for Investors
Bringing you the top stories from the Israeli business community, by Israel’s only business and finance network.
Share your thoughts with us via: global@tv10.co.il or the Newsroom WhatsApp: +972-55-994-5851.
📧 Subscribe to this newsletter! And follow the daily conversation on 𝕏 @tv10global.
Pings available via WhatsApp Channel.
Disclaimer: This brief is for informational purposes only and does not constitute investment advice. All data current as of publication date.