Miriam Cohen counts receipts late night, her calculator glowing under a dim lamp in her small Jerusalem café. The Bank of Israel’s decision to keep interest rates at 4.5%, announced Monday, means another month of juggling high loan payments to keep her business afloat. For Miriam and thousands of small business owners, the central bank’s choice to hold rates steady for the tenth straight meeting offers stability but no relief, as the nation basks in a rare moment of geopolitical calm.
The bank’s monetary policy committee pointed to stabilized inflation at 2.8%, within the 1-3% target, and a fragile economic recovery bolstered by a Qatar-mediated ceasefire with Iran. The 2023 Hamas conflict battered Israel’s economy, slowing growth to 0.9% in 2024. Governor Amir Yaron, speaking in Jerusalem, struck a cautious tone: “We’re seeing signs of resilience, but global trade risks, like U.S. tariffs, demand prudence.” The bank projects 3.5% growth in 2025, assuming no new disruptions.
For Miriam, 42, the high rates are personal. She borrowed heavily to keep her café open during the war, when customers dwindled. She said with her heavy voice with exhaustion that “I’m barely breaking even,”. “A rate cut could’ve meant hiring another barista or fixing the oven.” Her story echoes across Israel, where families face soaring mortgage costs amid a housing crunch and supply chain woes.
Economists saw the decision coming. All 14 polled by Reuters expected no change, citing the bank’s focus on inflation control. “They’re playing it safe until inflation trends lower,” said Ronen Menachem, chief markets economist at Mizrahi Tefahot Bank. “We might see a cut by late 2025 if conditions hold.” The shekel stayed flat against the dollar, reflecting market calm.
Reactions vary. Business groups welcomed the predictability, but on social media, young families vent frustration over mortgage rates that lock them out of homeownership. A Jerusalem teacher tweeted “It’s like the bank doesn’t see us”. The broader context—global trade tensions and a recovering economy—shapes the bank’s caution. U.S. tariffs, potentially targeting Israel’s $50 billion export sector, loom large.
Miriam keeps her café’s doors open, hoping for better days. The bank’s next meeting in August may signal whether relief is coming, as it monitors inflation and regional stability. For now, Miriam and others like her tally their costs, dreaming of a future where financial pressures ease.
