Bank of Israel holds rates again with inflation still above target

JERUSALEM, Jan 6 (Reuters) - The Bank of Israel left interest rates unchanged for the eighth straight meeting on Monday after inflation eased slightly but economic uncertainty remained due to Israel's ongoing war with Palestinian Islamist group Hamas in Gaza.

The central bank - also worried about Israel's investor risk premium which has recently dropped after a spike following the start of the war on Oct. 7, 2023 - left its benchmark rate at 4.50%.

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

Twelve of the 13 analysts polled by Reuters had expected no rate move on Monday. One predicted a quarter-point reduction.

Israel's annual inflation slipped to a four-month low of 3.4% in November but remained above the government's 1-3% target range.

In October central bankers warned of rate increases should inflation - mainly caused by war-related supply issues - stay lofty.

The economy rebounded somewhat in the third quarter after near zero growth the prior three months, expanding an annualised 3.8%. (Reporting by Steven Scheer; Editing by Toby Chopra)