Bank of Israel Says Inflation Stabilized as Risk Premium Declined

The Bank of Israel said annual inflation ended the first half of 2026 at 1.9%, down from 2.4% at the end of 2025 and near the midpoint of the target range. Broad unemployment among Israelis aged 25 to 64 fell to 3% in May, while wage growth reached 6.8% in March through May compared with a year earlier. The Monetary Committee cut the interest rate by 0.25 percentage points in January, May and July, bringing it to 3.5%. Israel's risk premium returned near its pre-October 7 level as the shekel strengthened about 10% against the dollar through May.