Bank of Israel interest rate today: 3.25%

Market data checked and verified 15 October 2026. Next Bank of Israel rate decision: Wednesday 21 October 2026.

What the rate is, and what it means if you have a mortgage

The Bank of Israel sets one number, and almost everything in Israeli household finance is priced off it. If you have an Israeli mortgage with a prime-linked track, the policy rate is not background news — it is your monthly payment. A quarter-point cut on a NIS 1,000,000 prime-linked balance reduces the interest cost by roughly NIS 208 a month.

Two things follow from how the rate is constructed, and both are worth internalising before you read any headline about it.

First, prime is mechanical, not competitive. Israeli prime is defined as the Bank of Israel policy rate plus 1.5 percentage points. Banks do not compete on prime and cannot change it independently. When the Monetary Committee moves, prime moves on the same day, by the same amount, at every bank in the country. Your mortgage rate is prime plus the bank's margin — and the margin, not prime, is the part that varies between offers.

Second, only part of your mortgage responds. Fixed non-linked (קל"צ) and fixed CPI-linked (ק"צ) tracks do not move when the Bank of Israel moves. That is precisely what you paid a premium for. So the practical question is never "will the rate change" but "how much of my balance is actually exposed".

The Bank of Israel said that the Monetary Committee's policy is focusing on price stability, support for economic activity, and stability of the markets. The interest rate path will be determined in accordance with the development of inflation, economic activity, geopolitical uncertainty, and fiscal developments.

Every rate change since the 2024 peak

The Bank of Israel held its policy rate at 4.50% through 2024 and most of 2025, then began cutting in November 2025. There have been five cuts, each of 0.25 percentage points, taking the rate from 4.50% to 3.25% — a total reduction of 1.25 points.

Israeli prime is not a market rate: it is the Bank of Israel policy rate plus 1.5 percentage points, so it moves on the same day and by the same amount. Source: Bank of Israel policy rate series, cross-checked against Bank of Israel decisions reported by Globes. Verified 15 October 2026.

How much a rate cut is actually worth to you

Rate headlines are reported in basis points, which tells you nothing about your budget. Here is the translation for a prime-linked balance, assuming the full change passes through — which for prime-linked tracks it does, automatically and immediately.

Calculated as balance × 0.25% ÷ 12 for the monthly figure. This is the interest-cost saving only. On a Spitzer schedule the payment does not fall by exactly this amount, because the bank recalculates the amortisation — the saving is spread across the remaining term. These figures are the right order of magnitude for planning, not an exact repayment recalculation.

Why the rate matters more in Israel than in most countries

In the US or UK, a central bank rate change affects new fixed-rate mortgages and touches existing borrowers only when they refinance. Israel works differently, and the difference is structural.

Because the Bank of Israel caps variable-rate exposure at two-thirds of the mix rather than discouraging it, a very large share of Israeli mortgage balances is deliberately parked on prime-linked tracks. That means a single committee decision transmits into household budgets within days, across the whole stock of lending — not just new originations. Israeli monetary policy is unusually direct.

It also means the trade-off is more visible than in other markets. A prime-heavy mix gives you a lower rate and immediate benefit from cuts, and it hands you immediate exposure to hikes. There is no fixed-rate borrower in the room to absorb it for you.

What it costs to get this wrong — and what we charge

What	Cost to you	Notes
Mortgage professional introduction	Free to you	We are paid by the professional, not by you, and we say so in writing before any introduction
Independent advice on your track mix	From the experienced professional	Their fee is typically NIS 3,000–6,000 or a small percentage, paid on completion
Semerenko Group mortgage advisory fee	None	We do not provide mortgage advice and we do not sell mortgages. We are not a broker

Semerenko Group is the English-first real estate platform for Israel. Our brokerage services operate under the professional supervision of Pinhas Menachem Reiss, Israeli broker license no. 324150. We coordinate property and financing steps with independent professionals; we are not a bank, lender or mortgage adviser. Our full compensation disclosure is published at How Semerenko Group Gets Paid.

What the Bank of Israel said at the last decision

The 1 September 2026 cut took the policy rate to 3.25%. It was the third consecutive cut and the fifth since November 2025. Economists had been split on whether the Committee would cut or hold.

Three points from the Committee’s statement matter for anyone borrowing:

• Inflation had moderated. The Bank said inflation was running “lower than the midpoint of the target range” — the target is 1%–3% a year. That is the condition that permits cuts.
• The cut was partly about activity, not only prices. The Bank said one aim was “to support economic activity”. Q2 2026 GDP was 6.2% higher than Q4 2025 in annualised terms, or 3.8% excluding production abroad by Israeli companies.
• Geopolitical risk remains the live uncertainty. The Bank noted that “uncertainty remains high in view of the geopolitical tensions”, while also observing that Israel’s risk premium had returned to levels similar to those before October 2023 and the exchange rate was virtually unchanged.

What happens next

The next Monetary Committee decision is Wednesday 21 October 2026. Citi published a view in September 2026 that there would be no cut at the October meeting, but two further cuts by the first quarter of 2027. That is a forecast, not a statement of policy, and the Committee has surprised economists in both directions this cycle — the September cut itself was contested before it happened.

If you are deciding whether to lock a fixed rate or wait for further cuts, the honest answer is that nobody knows the path. What you can control is how much of your balance is exposed. Model both directions in the calculator before you decide.

Bank of Israel rate questions

What is the Bank of Israel interest rate today?

3.25%, effective from 3 September 2026. It was cut by 0.25 percentage points from 3.50% — the third consecutive cut and the fifth since November 2025. The next Monetary Committee decision is 21 October 2026.

What is the Israeli prime rate today?

4.75%. Israeli prime is mechanically the Bank of Israel policy rate plus 1.5 percentage points, so it changes automatically whenever the policy rate changes. It is not a competitive market rate and no bank can set it independently.

When is the next Bank of Israel interest rate decision?

Wednesday 21 October 2026. The Monetary Committee meets roughly every six to eight weeks and publishes its decision in the late afternoon Israel time. Citi's September view was that there would be no cut in October but two more cuts by Q1 2027.

How much does a 0.25% rate cut save on a mortgage?

Roughly NIS 208 a month per NIS 1,000,000 of prime-linked balance — that is balance × 0.25% ÷ 12. Across the five cuts since November 2025, a 1.25-point reduction is worth about NIS 1,042 a month per million of prime-linked balance, or NIS 12,500 a year.

Does a rate cut reduce my mortgage payment automatically?

Only on prime-linked and variable tracks, and yes, automatically — the bank recalculates without you asking. Fixed non-linked (קל"צ) and fixed CPI-linked (ק"צ) tracks do not move at all. If your entire mortgage is fixed, a rate cut changes nothing about your payment.

Why did the Bank of Israel cut rates in 2026?

The Committee said inflation had moderated and was running below the midpoint of its 1%–3% target range, and that one aim of the cut was to support economic activity. It also flagged continued geopolitical uncertainty as the main risk to the outlook.

How far has the Bank of Israel rate fallen?

From 4.50%, where it sat from January 2024, to 3.25% as of September 2026 — five cuts of 0.25 points each, a total reduction of 1.25 percentage points. The policy rate had previously peaked at 4.75% in May 2023 during the inflation-fighting cycle.

Summary

The Bank of Israel policy rate is 3.25% and Israeli prime is 4.75%, because prime is defined as the policy rate plus 1.5 points. That mechanical link is why Israeli monetary policy transmits into household budgets within days rather than years: with up to two-thirds of a mashkanta permitted on variable tracks, a single committee decision immediately reprices a large share of the national mortgage book. The rate has fallen 1.25 points across five cuts since November 2025, worth roughly NIS 1,042 a month per million shekels of prime-linked balance. The next decision is 21 October 2026. If you want to know what a move would do to your own payment, model it rather than reading the headline.

Sources

1. Bank of Israel — third successive rate cut to 3.25%, 1 September 2026 — en.globes.co.il
2. Bank of Israel policy rate series — every change — datosmacro.expansion.com
3. Bank of Israel policy rate and next decision date, 21 October 2026 — fxmacrodata.com
4. Citi view on the rate path, September 2026 — en.globes.co.il
5. Supervisor of Banks — variable-track cap and one-third fixed minimum, 10 February 2026 — gnet.globes.co.il

Each figure on this page is dated and traceable to the source above. Where a number is an industry indication rather than a regulator's statistic, we say so.