The Bank of Israel has decided to keep borrowing costs unchanged at 4.5 percent, despite rising inflation and slow growth. Inflation accelerated to 3.8% in January, above the target range of 1% to 3%. The central bank expects inflation to converge into the target range in the second half of the year. The economy grew by 1% in 2024, but the war with Hamas and fighting with Hezbollah impacted exports and investments. The central bank is cautious about the impact of geopolitical developments and supply constraints on inflation pressure.