The Bank of Israel has left short-term interest rates unchanged for a second straight month as expected, amid fears of a rise in inflation stemming from the conflict with Iran that has driven up oil prices, Reuters reports.

After cuts in November and January following a ceasefire in Gaza, the central bank held steady last month to leave its benchmark rate at 4 per cent.

Israel’s annual inflation rate moved higher in February to 2pc from a 4-1/2-year low of 1.8pc in January, staying well within an official target range of 1-3pc.

All 13 economists polled by Reuters had projected no move, citing the US and Israeli strikes launched on February 28 that resulted in Iran largely shutting the Strait of Hormuz, sending oil prices soaring.