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COUNTRY INSIGHTS

Israel slows bond issuance in September, but fiscal risks point to higher borrowing ahead
ISRAEL · In Brief · 27 Aug 2025

The government’s monthly issuance plan for September 2025 is to raise NIS 11.0 billion in tradable bonds on the local capital market in four weekly tenders, averaging NIS 2.75 billion per week. This marks a slower pace than in previous months: In July, issuance totaled NIS 12.37 billion, after a ...

Bank of Israel holds rates; future easing less likely as Gaza operation gets underway
ISRAEL · In Brief · 20 Aug 2025

As we expected, the Bank of Israel kept the benchmark rate unchanged at 4.5% yesterday, for the 13th consecutive meeting. The tone was cautious and hawkish, with emphasis on inflation risks, geopolitical uncertainty, and a tight labor market. The bank also mentioned signs of a rapid recovery afte...

Bank of Israel expected to hold rates tomorrow; window for Q4 easing exists
ISRAEL · In Brief · 19 Aug 2025

The Bank of Israel is expected to announce its key policy rate decision tomorrow (Wednesday, August 20). We do not expect a rate cut at this meeting. Why wait: Headline inflation has eased but remains above the 3% upper bound. The BoI continues to warn of labor-supply-driven price pressures, incl...

Sharp drop in GDP in Q2 not only due to the war with Iran; Gaza war poses growth risks ahead
ISRAEL · In Brief · 18 Aug 2025 · 1 response

Preliminary data for Q2 GDP show an annualized contraction of about 3.5%. The decline reflects the impact of the Israel-Iran war at the end of the quarter, which led to a partial shutdown of the economy in the last two weeks of June. Compared to a year earlier, GDP increased by 1.6%, but relative...

July print analysis: housing and seasonality pushed inflation up; the shekel offset some of the pressure
ISRAEL · In Brief · 18 Aug 2025

July’s CPI rose 0.4% m/m in line with our expectations, leaving headline inflation at 3.1% y/y, still slightly above the target range of the central bank (1%-3%). The print was a classic summer seasonal mix: Airfares increased 11% and domestic holidays 6.6%, both pushing up the index, while cloth...

July CPI preview: inflation to remain above target, Gaza operation endangers rate-cut prospects
ISRAEL · In Brief · 14 Aug 2025

Tomorrow (Friday) we will get July’s CPI print, and we will be watching it closely. We expect a 0.3%-0.4% monthly increase, which would keep annual inflation at around 3.1%, still above the Bank of Israel’s 1%-3% target range. July is typically a low-to-moderate CPI month, with an average monthly...

Israel’s July fiscal data: deficit narrows, but risks rise from Gaza takeover plan
ISRAEL · In Brief · 11 Aug 2025

The Ministry of Finance reported a fiscal deficit of NIS 4.7 billion ($1.4 billion) in July, with the trailing 12-month deficit narrowing to 4.8% of GDP from 5% in June. The budget deficit peaked at 8.5% of GDP in September 2024. Tax revenues in July totaled NIS 46.4 billion and reached NIS 306 b...

Foreigners were the dominant segment supporting shekel appreciation in Q2
ISRAEL · In Brief · 06 Aug 2025

The Israeli shekel appreciated significantly in Q2 2025, gaining approximately 9.3% against the US dollar and 1.5% against the euro, driven by improved investor sentiment following Operation “Am KeLavi” and broad-based dollar weakness in global markets. The shekel also strengthened by 6% in effec...

Israeli geopolitics: August 2025—dangerous stalemates on all fronts
ISRAEL · Report · 05 Aug 2025

Key takeaways from this report: Gaza ceasefire talks remain stalled: Negotiations between Israel and Hamas have collapsed over core disputes, including the extent of Israeli withdrawal, a commitment to ending the war, and the scope of prisoner exchanges. Efforts by mediators continue, but no b...

Wage growth slows in Israel in June; real wages continue to decline
ISRAEL · In Brief · 04 Aug 2025 · 1 response

The average nominal wage for all workers increased by 2.1% over the past year (based on original data through June), and by 2.5% among Israeli workers only. When seasonally adjusted, wages likely rose at a rate of about 3%, which is still considered relatively low (below the increase of inflation...

Israel cuts bond issuance in August, suggesting fiscal pressures remain contained
ISRAEL · In Brief · 31 Jul 2025

The Israeli Ministry of Finance plans to raise only NIS 5 billion in tradable bonds in August, through just two weekly auctions. This reduced issuance pace - partly due to summer seasonality -suggests the government does not expect a significant fiscal deterioration beyond its current deficit tar...

Temporary contraction in economic activity in June due to the war; slowdown unlikely to affect monetary policy
ISRAEL · In Brief · 30 Jul 2025

Summary of key findings The Bank of Israel’s composite index fell by 0.67% in June, due to the war with Iran. The decline reflects a temporary slowdown in economic activity, especially in private consumption and employment. Despite the recent slowdown, we expect the interest rate to remain unchan...

Israel’s June labor market update: broad unemployment jumps, but labor market remains tight
ISRAEL · In Brief · 22 Jul 2025 · 1 response

According to preliminary figures released yesterday by the Central Bureau of Statistics, the broad unemployment rate in Israel surged to 10.0% in June, largely due to the two-week war with Iran. The number of people absent from work due to the war reached 295 thousand while the number of military...

Israel’s political crisis and its fiscal implications for 2025–2026
ISRAEL · In Brief · 18 Jul 2025

Prime Minister Netanyahu’s government lost its parliamentary majority this week, after the two ultra-Orthodox parties—Shas and United Torah Judaism—announced their resignation from the government. The move came after the coalition failed to submit a draft law that would exempt most ultra-Orthodox...

Israel's June CPI surprised to the upside: +0.3% m/m, 3.3% y/y - lowering chances of a near-term rate cut
ISRAEL · In Brief · 17 Jul 2025

The June CPI surprised on the upside, rising by 0.3% month-on-month at the upper end of market expectations—and pushing annual inflation up to 3.3%, from 3.1% in May. Food and housing remained the main drivers of the increase, each rising by 0.7% and 0.6%, respectively. Core services also increas...

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