Bank of Israel​

Inflation expectations derived from the capital market are defined as the ratio between the yields on unindexed government bonds and the yields on CPI-indexed government bonds (breakeven inflation).

The first half of the year featured continued geopolitical uncertainty. Annual inflation declined, in contrast with the global trend, and stabilized around the midpoint of the target range, and the unemployment rate remained low except for a temporary increase during Operation Roaring Lion (the military confrontation with Iran that began on February 28, 2026).

The monthly Index of Economic Activity increased by 2.5 percent in June. The Index this month reflects the average monthly growth estimate for the three months from April to June.

Bank of Israel Governor Prof. Amir Yaron and the members of the Monetary Committee held their quarterly meeting today with the group of forecasters who regularly provide the Bank of Israel with projections for inflation, the interest rate, and the exchange rate.

Israel’s foreign exchange reserves at the end of June 2026 stood at $238,699 million, an increase of $18 million from their level at the end of the previous month. The level of the reserves relative to GDP was 37.2 percent (Figure 1).