The Bank of Israel Monetary Committee has lowered the national interest rate to 3.50% from 3.75%, marking a continued easing cycle as inflationary pressures subside and the shekel maintains its strength.
The decision, announced on Monday, reflects the committee's assessment that the current monetary stance is appropriate given the improving macroeconomic environment.
The rate cut comes against a backdrop of significant geopolitical de-escalation.
Iran has officially ceased its military strikes against Israel, bringing a temporary halt to the missile exchanges that erupted over the weekend.
This cessation of hostilities has contributed to a more stable risk environment, supporting the shekel's performance and allowing the central bank to focus on domestic economic conditions rather than crisis management.
The move underscores the resilience of the Israeli economy, which has significantly outperformed a broad group of developed-market peers, including the United States, despite the country remaining on an effective war footing for nearly three years.