Insulating Basement Wall w/ Stepback

Currently finishing my basement.
In the attached pic you can see where my foundation contractor went from what looks like 8″ CMU to 4″ CMU. This area is on the backside of my house that is above grade.
I’ve installed 1″ rigid foam on the inside of the foundation per my research and discussions here.
However, there is a decent sized gap between the concrete wall and framed 2×4 wall in this location. I have Rockwool batts between the 2×4’s.. What would be the best wan to handle the gap in this area?
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Replies
Bumping this post. Can anyone provide some feedback? Looking to sheetrock soon.
Thanks,
mcervinojr,
Fill the gap with batts to stop convective currents.
Unfaced?
Yes
Malcolm,
Thank you for your help. It’s been greatly appreciated. Any downside to not insulating this area? I’m always worried about over insulating. Also would a smart membrane be required here, or is that not required since the rigid foam is in the wall?
This small piece of foundation is above grade at the backside of the house FWIW
mcervinojr,
Uninsulated, the gap will experience some convective air currents that will very slightly reduce the effectiveness of the batt insulation. Beyond that I don't see a problem.
No need for any interior membrane.
Thank You Malcom.