Bank of Israel's statement after monetary policy meeting

(Reuters) -The Bank of Israel held interest rates steady on Monday.

Following are the main points of the bank's post-meeting statement.

* In view of the intensification of the fighting in Gaza and a deterioration in international sentiment toward Israel, uncertainty in the geopolitical environment is high.

* In the coming months, inflation is expected to remain around the upper bound of the target range, and even to cross it, and will begin to moderate in early 2026.

* The labor market remains tight, mainly due to labor supply constraints resulting from the mobilization of reserve soldiers and the shortage of non-Israeli workers.

* The volume of activity in the construction industry remains significant, and the numbers of building starts and building permits continue to increase and remain high in annual terms.

* According to the Research Department staff forecast’s assessment, under the assumption that the fighting in Gaza continues at varying intensity and ends during the first quarter of 2026, GDP is expected to grow by 2.5 percent in 2025 and by 4.7 percent in 2026, and the inflation rate is expected to be 3 percent in 2025 and 2.2 percent in 2026.

* In view of the geopolitical uncertainty, the interest rate path will be determined in accordance with the convergence of inflation to its target range, stability in the financial markets, economic activity, and fiscal policy.

For the full statement, click here.

(Compiled by Toby Chopra)

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