Recent inflation readings at 1.5% in July, well inside the Bank of Israel's 1-3% target range, combined with Governor Amir Yaron's recent statements that price pressures are expected to rise toward 2% and that the September 1 decision will hinge on incoming data, have anchored trader expectations for no change at the current 3.5% policy rate. Following two cuts earlier in 2026, the central bank's staff forecasts show continued economic recovery with GDP growth near 4% this year, supporting a pause to assess labor-market and currency developments. A sharper-than-expected inflation print, renewed geopolitical tensions that lift energy costs or weaken the shekel, or faster disinflation could still shift the outlook before the meeting.