Weekly report, September 8, 2026: Dovish BoI tone, inflation to edge higher, rates on hold

ISRAEL - Report 08 Sep 2026 by Sani Ziv

BoI officials struck a relatively dovish tone in the past week, citing both weaker underlying growth excluding production abroad and the strong shekel. Softer wage growth also supports this view. Inflation is likely to edge slightly higher in the near term: we expect the August CPI to rise by around 0.8%, followed by a decline of close to 0.4% in September, largely due to the fuel excise-tax cut. Even so, we expect rates to remain unchanged through year-end. Politically, the closing of candidate lists has so far produced only limited consolidation, but has led to some strengthening of Netanyahu’s bloc, although it still trails the opposing bloc by a significant margin.

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