Israel's central bank resumed interest rate cuts on Monday, encouraged by stabilizing inflation, a stronger shekel and signs that the US and Iran are edging closer to a deal to extend their ceasefire.
The Bank of Israel lowered its base rate by 25 basis points to 3.75%, in line with the median projection of 14 economists in a Bloomberg survey. Policymakers left borrowing costs unchanged in the two previous meetings due to risks to inflation and growth from the Iran war, triggered by US-Israeli strikes on the Islamic Republic in late February.
Forward guidance remained unchanged, with the central bank saying interest rates going forward will be determined “in accordance with inflation developments, economic activity, geopolitical uncertainty, and fiscal developments.”
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The US and Iran are inching closer to a deal to extend the ceasefire agreed on April 8 and reopen the Strait of Hormuz. But officials on both sides have signaled that certain points still need to be negotiated before an announcement is made.
Read More: US, Iran Edge Closer to Deal But Still Need to Negotiate Points
The Israeli shekel is trading around 2.9 against the dollar, close to its strongest position in over three decades, solidifying expectations of moderate inflation.
Israel's average inflation forecast for next 12 months fell to 1.8% from a previous 2.3%, according to Bank of Israel survey published on May 19.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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