Weekly Report - September 28, 2026: Growth moderates; wider Israel-US rate gap weighs on the shekel; Supreme Court review on Thursday

ISRAEL - Report 28 Sep 2026 by Sani Ziv

Activity data suggest that the economy continued to expand at the start of Q3, although at a more moderate pace, while strong credit growth points to continued resilience. Israeli high-tech fundraising also remained strong in Q3, reaching USD 3.6bn and reinforcing continued capital inflows. With inflation still contained but the labor market tight, energy prices rising, and wider Israel-US rate differentials increasing hedging costs and reducing some of the support for the shekel, we expect the Bank of Israel to keep the policy rate at 3.25% through the rest of 2026.

Political attention this week will focus on Thursday’s Supreme Court hearing on the disqualification of Ra’am, the Joint List and several candidates. The Court’s high threshold for disqualification makes the hearing particularly important ahead of the election.

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