Geopolitical uncertainties stemming from recent regional conflicts have elevated inflation risks through higher energy prices, prompting the Bank of Israel Monetary Committee to hold the policy rate steady at 4 percent in its March decision and signal a cautious approach ahead of the July meeting. With year-over-year inflation hovering near the 2 percent midpoint of the target range and forecasts for 2026 growth trimmed amid supply constraints and fiscal pressures, traders assign 62.5 percent probability to no change, viewing it as the prudent path to assess lingering effects. A 39.5 percent chance of a decrease reflects expectations of gradual easing if inflation stabilizes and activity improves, consistent with the governor’s guidance on possible further adjustments by early 2027, while the low 3.6 percent odds of an increase align with the absence of overheating signals. Upcoming May data releases and any diplomatic developments will likely shape sentiment for the July outcome.