Trader sentiment strongly favors a Bank of Israel rate cut in May, driven by the central bank’s established easing bias after two 25-basis-point reductions earlier in 2026 that brought the policy rate to 4.00 percent. Subdued inflation, with the latest forecasts placing 2026 readings at 1.7–2.2 percent within the lower half of the 1–3 percent target range, supports further monetary loosening despite the March hold. Markets view that pause as a temporary response to geopolitical uncertainty rather than a policy shift, especially as one-year inflation expectations have stabilized near 1.5–2.0 percent. Banks have already begun trimming deposit rates in anticipation of a 25-basis-point cut at the May 28 meeting, underscoring the high implied probability priced into the outcome.