Israel: inflation softens in September but upside risks rising

Israel’s economy is under strain from the conflicts in Gaza and Lebanon, with supply constraints both holding back growth and causing inflation concerns to build. The softer-than-expected inflation figures for September released today will provide some relief to the central bank and reduce expectations for an interest rate hike in the very near term. But the likelihood of monetary tightening will only grow if the war escalates and fiscal policy remains very loose.