Bank of Israel cuts interest rates by 25 basis points

JERUSALEM, Jan 5 (Reuters) - The Bank of Israel unexpectedly cut its short-term interest rate by 25 basis points on Monday, a second successive cut after lowering it in November for the first time in nearly two years.

The central bank's benchmark rate ILINR=ECI was reduced to 4.00% from 4.25%.

Annual Israeli inflation eased to a rate of 2.4% in November, within the government's 1-3% target range.

Supply constraints had stoked inflation during the two year war in Gaza that ended with a U.S.-brokered ceasefire in October 2025.

Despite easing price pressures and a four-year high for the shekel ILS= versus the dollar, nine of the 10 economists polled by Reuters had forecast the central bank would hold rates this month, while one economist expected a quarter-point reduction.