The Bank of Israel’s September 1 decision, covering the August policy window, shows a 96.3% market-implied probability of a 25 basis point cut to the policy rate from 3.5%. This positioning reflects inflation falling to 1.5% in July—well inside the 1-3% target range—combined with moderate GDP growth, a stronger shekel, and lower energy prices following U.S.-Iran developments. The central bank’s July cut and forward guidance pointing toward a 3% rate over the next year have reinforced trader expectations for continued easing. A rebound in inflation above target, renewed geopolitical shocks lifting energy costs, or unexpectedly tight labor market data could still shift sentiment toward no change.