The Bank of Israel’s September 1 decision carries a strong trader consensus for no change at the current 3.5% policy rate, reflecting inflation’s recent drop to a five-year low of 1.5% in July alongside balanced risks after two consecutive 25-basis-point cuts in May and July. The Monetary Committee has emphasized data dependence amid expectations that inflation will rebound toward the 2% midpoint of the 1–3% target range, while the shekel’s volatility, tight labor market conditions, and fiscal uncertainties around defense spending weigh against further easing. Governor remarks in August highlighted increased uncertainty and the lack of urgency for immediate action, aligning with private forecasts that see the next cuts arriving later in the cycle rather than at this meeting. An increase remains remote given subdued price pressures, while the modest probability attached to a decrease captures residual scope for additional accommodation if incoming data reinforce the disinflation trend.