The Bank of Israel’s policy rate stands at 3.50% after the July 6, 2026, 25-basis-point cut. July inflation eased to 1.5%, remaining well inside the 1–3% target and marking the lowest reading since 2021, while staff forecasts project 4% GDP growth for 2026 and 5.5% for 2027. These developments, together with a strong shekel and lower risk premium, support the 72.5% trader-implied probability of no change at the September 1 meeting. The Monetary Committee’s recent guidance on gradual easing has already been partially delivered, and market participants price limited scope for an immediate further reduction given the short interval since July and ongoing pressures in housing and rents. A cut retains 27.5% probability if incoming data reinforce the low-inflation path, while an increase remains negligible at 0.1%.