The Bank of Israel Monetary Committee, headed by Governor Prof. Amir Yaron, has kept the interest rate unchanged at 4%, as expected, due to the war and the ongoing geopolitical uncertainty. The Bank of Israel kept the rate unchanged last month amid war concerns but had made two consecutive cuts of 0.25% at each of its previous two meetings in November and January.
The Bank of Israel also noted "An increase in the inflation environment, mainly due to a marked increase in global energy prices."
According to the revised Bank of Israel research department forecast, which was formulated under the assumption that Operation Roaring Lion and the fighting in Lebanon will end toward the end of April, GDP is expected to grow by 3.8% in 2026 and by 5.5% in 2027, compared with 5.2% and 4.3%, respectively, in the January forecast. The budget deficit is expected to be 5.3% of GDP in 2026 and 4.4% of GDP in 2027, and the debt-to-GDP ratio is expected to be about 70.5% of GDP in 2026 and at the end of 2027.
This GDP growth forecast is in line with the Ministry of Finance chief economist, who this morning cut the 2026 forecast to 3.8%, if the war ends in April.
Treasury chief resigns after just one year
Meanwhile, in a surprise move, Ministry of Finance director general Ilan Rom has announced his resignation after just one year in the post. The announcement follows the passage of the 2026 state budget by the Knesset last night.
Rom took up his post in March 2025, replacing Shlomi Heisler. He was previously CEO of the Mateh Binyamin Regional Council in the West Bank.
Rom's background is mainly in security. He served in the Mossad for 25 years, reaching a rank equivalent to brigadier general. He has no education in economics or significant experience in areas to do with the functions of the Ministry of Finance, a fact that aroused criticism of his appointment by former senior Ministry of Finance officials. He holds a first degree in archeology and a second degree in law.
In announcing that Rom was stepping down, Minister of Finance Bezalel Smotrich said, "I enjoyed a close and even friendly relationship in our work together," and extolled their cooperation. Sources close to the work of the ministry told "Globes" however of tension between the two men, with Smotrich making decisions without consulting the director general, which they said may have been one reason for Rom's resignation.
Rom's name arose as a prominent candidate for the role of head of the National Security Council, and this may well be the next step in his career. Rom himself refused to comment on the matter.