The Bank of Israel’s July 6, 2026, decision follows the Monetary Committee’s May 25 cut of 25 basis points to 3.75 percent, prompted by headline inflation holding at 1.9 percent near the target midpoint, an over-8 percent appreciation of the shekel since January, and signs of economic stabilization after Q1 contraction. Geopolitical uncertainty tied to the Iran conflict remains elevated and continues to support a cautious, data-dependent path, yet the combination of contained price pressures and currency strength has shifted trader positioning toward another modest easing. Minutes released in early June reinforced that future moves hinge on incoming CPI prints, activity indicators, and fiscal developments rather than preset schedules. With these conditions intact into mid-June, market pricing assigns the highest probability to a further reduction while leaving room for a hold if external risks intensify.