The Bank of Israel’s established easing bias, reinforced by its January 25-basis-point cut to the 4.00 percent benchmark rate, anchors the 80 percent implied probability of a May decrease. Official forecasts place 2026 inflation at 1.7–2.2 percent, comfortably below the midpoint of the 1–3 percent target range, while one-year market expectations have stabilized near 1.5–2.0 percent following the March hold. That pause reflected a temporary response to energy-driven CPI spikes and renewed Iran-related geopolitical risks rather than a shift in policy stance. Banks have already begun adjusting deposit rates in anticipation of a move to 3.75 percent at the May 25 decision. The April CPI release and Monetary Committee deliberations remain the key near-term catalysts that could fine-tune the pace of further gradual cuts toward the 3.5 percent path outlined by Governor Amir Yaron.