The Bank of Israel's policy rate stands at 3.50% after consecutive 25-basis-point cuts in May and July 2026. Traders assign a 71.5% implied probability to no change at the September 1 meeting because annual inflation has held near 1.9%—comfortably inside the 1–3% target—while the shekel remains strong, curbing imported price pressures and supporting expectations that the disinflation trend will persist. Economic indicators show ongoing recovery, with GDP forecasts clustered around 3.5–4% for 2026 and inflation expectations at 1.5%, reducing the case for immediate further easing. The 28.5% odds on a decrease reflect Governor Amir Yaron’s prior comments that additional cuts remain possible if price data continue to moderate without new supply shocks. The negligible 0.1% probability on an increase aligns with the absence of fresh inflationary impulses from energy costs or geopolitical developments in recent weeks.