Weekly report, August 31, 2026: BoI rate decision tomorrow, politics approaches the candidate-list deadline, and some loss of economic momentum

ISRAEL - Report 31 Aug 2026 by Sani Ziv

The Bank of Israel will announce its interest-rate decision tomorrow. The decision appears finely balanced, although our view remains that the Bank is more likely to wait rather than cut rates. The August CPI is forecast to rise by a relatively high 0.8%, followed by a 0.2% decline in September. Annual inflation is expected to rise to around 1.7% in August and then to 2.1% following the September CPI, remaining around this level in the following months. Economic activity has weakened somewhat at the start of the third quarter, but the economy continues to expand, supported in particular by strong high-tech activity. The fiscal picture remains relatively favorable, although additional defense spending remains the main risk. On the political front, attention is shifting to the candidate-list deadline, with negotiations and potential mergers among smaller parties likely to intensify next week.

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