Israel Holds Rates at 4% as Iran War Drives Oil Surge and Inflation Risk

After earlier rate cuts in November and January, Israel’s central bank paused again as the Iran conflict pushed energy prices higher. The Bank of Israel kept its key interest rate at 4% on March 30 for a second straight meeting, with all four policymakers voting to hold. The decision followed the outbreak of fighting on February 28, when Iran restricted the Strait of Hormuz, sending oil prices higher before a fragile ceasefire on April 8. Inflation reached 2.0% in February, within the 1–3% target, but officials said rising energy costs are yet to be reflected. The bank now expects inflation at 2.3% in 2026, up from 2.0%. Growth is seen slowing to 3.8% from 5.2%. Only one rate cut is now expected in 2026, down from four earlier projections.