The Bank of Israel’s September 1 decision lowered the benchmark rate by 25 basis points to 3.25 percent, the third consecutive cut and the fourth since January, citing annual inflation at 1.5 percent—below the target midpoint—along with a strong shekel that curbs imported price pressures and a risk premium near pre-2023 levels. Domestic activity appears more subdued when excluding foreign production, with modest unemployment upticks noted in recent data. Deputy Governor Andrew Abir and Governor Amir Yaron have signaled that the October 21 path will hinge on whether inflation stabilizes near target or continues easing, alongside fiscal developments and geopolitical conditions ahead of the late-October national election. Market pricing reflects expectations of a pause to evaluate the cumulative easing impact before any further adjustment.