Trump's Tariffs: Bank of Israel says Israeli exports will be "significantly" affected

The Bank of Israel decided today (Monday) to leave the current interest rate of 4.5% in place for the tenth time in a row, due to persistently high inflation of 3.4% and Trump's tariffs. They also said that the tariffs will significantly harm Israeli exports.

The Bank addressed the "turmoil" caused by "the new tariff program announced by the American administration and its expected economic implications." They then said that "Global growth and trade forecasts were sharply revised downward. At the same time, in the United States, there was a decrease in the expected interest rate path in the markets, as well as an increase in inflation expectations – an increase that may also filter through to other countries. These developments are expected to have a significant impact on the Israeli economy," including, presumably, inflation.

Regarding Israel's own situation, the Bank said things are improving but that uncertainty and too high inflation are warning signs: "The Israeli economy continues to demonstrate resilience and is recovering moderately against the backdrop of the complex period we are in, characterized by very high uncertainty. Despite signs of moderation recorded recently, inflation continues to remain above the target. At the same time, Israel's risk premium has risen significantly, influenced by geopolitical uncertainty."

According to the Bank of Israel's assessment, President Trump's tariffs will "moderate" Israeli exports to the US: "Also, according to the forecast, the new tariff policy announced by the US administration is expected to moderate the volume of global trade and reduce Israeli exports."