The Bank of Israel’s September 1 decision to cut its policy rate to 3.25% reflected subdued inflation near 1.5% and a strong shekel, yet subsequent data releases and analyst assessments have highlighted emerging upside risks to prices from energy costs, housing, and supply disruptions. Governor Amir Yaron and Monetary Committee statements emphasize a data-dependent path, with inflation expectations and geopolitical uncertainties influencing the pace of easing. Recent forecasts from private economists point to a likely pause in October amid these pressures and fiscal concerns, aligning with the market’s 78% implied probability of no change. A further reduction would require clearer evidence of sustained low inflation or improved stability, while an increase remains improbable given the current target range and growth dynamics. The October 21 decision precedes national elections, adding to the focus on incoming indicators.