The Bank of Israel’s Monetary Committee last cut the policy rate by 25 basis points to 3.25% on September 1, 2026, after four reductions totaling 100 basis points since the start of the year. Annual inflation stands at 1.5%, below the midpoint of the 1–3% target range, while second-quarter GDP showed solid recovery from earlier geopolitical disruptions. With the next decision scheduled for October 21 and an updated staff forecast due, most market participants expect the committee to pause amid the recent easing cycle, upcoming Knesset elections on October 27, and contrasting global policy signals such as the Federal Reserve’s September hike. A further cut remains possible if incoming data confirm subdued price pressures, but an increase faces significant barriers given the current inflation trajectory and domestic growth outlook.