The Bank of Israel's Monetary Committee cut its benchmark rate by 25 basis points to 3.25% on September 1, extending the easing cycle that began earlier in 2026. Trader consensus for another decrease reflected July inflation at 1.5%—comfortably inside the 1-3% target—combined with shekel appreciation that further eased price pressures and moderate GDP growth in the first half of the year. Successive prior cuts in January, May, and July established a clear policy path while energy prices remained contained following earlier diplomatic developments. Markets assigned negligible probability to a hold or hike because incoming data showed balanced or downward risks to inflation and no immediate signs of renewed overheating in the labor market. A material shift away from easing would require rapid escalation in geopolitical tensions, a sharp rebound in energy costs, or fiscal developments that materially alter the inflation outlook before the next scheduled decision in October.