Bank of Israel Reduces Interest Rates Amid Gaza War

Israel's central bank, the Bank of Israel, has cut interest rates by 0.25 basis points to 4.5 per cent, marking the first reduction since April 2020. The decision follows the ongoing war with the Hamas terror group, which has led to significant economic consequences. The war has affected real economic activity and financial markets, leading to a high level of uncertainty. The central bank is urging the Israeli government to curb public spending in the face of a projected cost of Shk210bn ($58bn) for the war. The bank also expects GDP to grow by 2 per cent each year in 2023 and 2024, and by 5 per cent in 2025, with the forecast featuring an especially high level of uncertainty due to the ongoing war.