Israel central bank holds rate again as military conflicts boost inflation

JERUSALEM, Oct 9 (Reuters) - The Bank of Israel kept interest rates unchanged on Wednesday for the sixth straight meeting, staying cautious as Israel's year-long war with Hamas in Gaza and fighting with Hezbollah in Lebanon accelerates inflation and weakens economic activity.

The central bank - also worried about Israel's investor risk premium which has risen since the war began on Oct. 7, 2023 - left its benchmark rate at 4.50%.

It had reduced the rate by 25 basis points in January after inflation eased and economic growth slowed amid the Gaza war, but kept policy steady in February, April, May, July and August.

All 14 analysts polled by Reuters had expected no rates move on Wednesday. The policy decision was pushed back from Oct. 7.

Israel's annual inflation rate rose to 3.6% in August from 3.2% in the previous month, moving further above the government's 1-3% target range after falling as low as 2.5% in February.

The economy grew an annualised 0.7% in the second quarter, slowing markedly from a 17.2% pace in the first quarter. (Reporting by Steven Scheer; Editing by Toby Chopra)