Bank of Israel cuts interest rate after nearly 2 years | TV10 Daily
Re: November 24, 2025 in Israel - and what it all means for investors at home and abroad.
The Bank of Israel cut its interest rate for the first time in nearly two years today, dropping it 25 basis points to 4.25%. The Prime Rate now sits at 5.75%. Citing market conditions and economic activity recovering sharply in Q3, Bank of Israel Governor Amir Yaron told TV10 what was behind today’s decision.
Bank of Israel Governor Yaron said: The decision reflects controlled inflation at 2.5%, a tightening labor market, and seven consecutive months of declining home prices. But he added a warning: if the 2026 budget isn’t managed responsibly, expectations for further cuts will diminish.
Markets loved it. On Monday, Nov. 24, 2025, the TA-125 and TA-35 indices were up 1.53%, with the TA-90 up by 1.67%.
TASE VP of Trading Yaniv Pagot said,
“The local stock market has overcome the security tensions reported earlier today, and therefore the increases indicate a focus on the Bank of Israel’s interest rate decision and on market trends abroad. Among the sectoral indices…the TA Insurance index rose 4% and the TA Construction index rose 2.7%.”
Credit rating impact: S&P’s recent upgrade of Israel’s outlook from negative to stable (covered in our weekly brief) likely supported today’s market confidence alongside the rate cut.
Our take: The 0.25% cut confirms the easing cycle has started, but Yaron’s fiscal warning matters. The 2026 budget negotiations will determine whether next January brings another cut or a hold. Markets are pricing in optimism, but the government’s fiscal discipline will be the real test.
Next rate decision: January 5, 2026.
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Disclaimer: This brief is for informational purposes only and does not constitute investment advice. All data current as of the date and time of publication.