Recent inflation readings near the 2 percent midpoint of the Bank of Israel's 1-3 percent target, combined with stable 2026 forecasts around 2.2 percent, have anchored trader expectations for a July hold at the current 4 percent policy rate. The Monetary Committee has maintained a cautious stance since its March pause, citing persistent geopolitical risks, elevated fiscal deficits, and supply-side pressures from labor shortages that could rekindle price pressures. While the January cut reflected easing inflation and ceasefire optimism, subsequent energy-driven upticks and resilient economic activity have reduced the urgency for further easing before the July meeting. Market pricing therefore reflects a high probability of steady policy, with any cut hinging on clearer disinflation signals from upcoming CPI releases.