All 16 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 jumped to 1.5% in May - near the midpoint of the government’s 1-3% annual target range - from 0.8% in April, but policymakers have said it was difficult to determine whether the rise in inflation is transitory.
At the same time, a rapid COVID-19 vaccination rollout has led to a rapid economic rebound with the country almost fully open.
The next policy move is widely expected to be a rate increase in 2022 or 2023.
Rather than lower the key rate to zero or into negative territory, the central bank has preferred to use other measures to stimulate the economy such as buying foreign currency and government and corporate bonds. (Reporting by Steven Scheer; Editing by Toby Chopra)