JERUSALEM: The Bank of Israel held its benchmark interest rate at 0.1% for a ninth straight policy meeting on Monday after data showed inflation moving towards a target range and amid optimism over an economic recovery due to a rapid COVID-19 vaccine rollout.

All 17 economists polled by Reuters had said they expected the monetary policy committee to keep rates steady after doing so ever since cutting them from 0.25% more than a year ago.

Israel's inflation rate moved to 0.8% in April from 0.2% in March, just below the government's 1-3% annual target range. While the economy contracted an annualised 6.5% in the first quarter from the prior three months, growth is expected to reach 4-6% in 2021 given more than half of Israeli adults are already vaccinated and the economy has largely reopened.

Central bank officials have expressed reluctance to lower the key rate to zero or into negative territory despite a strong shekel and three lockdowns. Instead, they prefer to use other measures to stimulate the economy such as buying foreign currency and government and corporate bonds.