Macroeconomic and geopolitical developments – Weekly report, December 2, 2025
This week in Israel was once again dominated by political developments. The government is pushing to pass the Draft Bill quickly to secure ultra-Orthodox support ahead of the planned November elections, yet resistance within the coalition and among the public continues to intensify. Prime Minister Netanyahu’s request for a presidential pardon—submitted while standing trial for bribery, fraud, and breach of trust, added further political friction, even as the move was strengthened by renewed backing from President Trump. On the economic front, household demand remains solid, with credit-card purchases remaining well above trend. Israeli high-tech firms continued to raise capital at a relatively strong pace, supporting the shekel. The Tel Aviv Stock Exchange posted a positive month in November, and bond indices edged higher. November closed with an exchange rate of about 3.25 shekels per dollar, and the CPI for November is expected to be negative due to seasonal factors. Our inflation outlook remains unchanged at 2.6% for 2025–2026, and we continue to expect a cautious easing cycle, with the next rate cut more likely in February and the policy rate converging toward ~3.5% by end-2026.
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