On Monday, the Bank of Israel announced a reduction in its benchmark interest rate from 4% to 3.75%, marking the third cut in six months. This decision comes amid stable inflation, which held at 1.9% in April, comfortably within the central bank's target range of 1-3%. The central bank noted that the shekel's significant appreciation, reaching a 33-year peak against the dollar, has contributed to moderating inflation. However, concerns persist regarding geopolitical uncertainties, particularly the ongoing conflict with Iran, which has the potential to impact economic activity and inflation rates. Despite these tensions, the Bank of Israel's recent statement indicated a focus on price stability and support for economic activity. The Monetary Committee anticipates two more rate cuts by early 2027, aiming to bring the policy rate down to 3.5%. The bank's future interest rate decisions will be influenced by developments in inflation, economic activity, and geopolitical factors.