Israel's interest rates are expected to remain steady as the ongoing conflict between the U.S. and Israel escalates, leading to concerns about inflation. Economists had predicted that the key rate would fall to between 3% and 3.5% this year, but now they see a 25-basis-point cut. This comes after Iran's strikes on February 28 resulted in the closure of the Strait of Hormuz, sending oil prices soaring. The Bank of Israel remained cautious throughout the Gaza war due to supply-led price pressures. Despite this, Israel's annual inflation rate rose to 2% in February, rising from 1.8% in January.