JERUSALEM, Sept 4 Reuters The Bank of Israel left shortterm borrowing rates unchanged on Monday for the second time in a row following signs of easing inflation as it remained unclear whether central bank chief Amir Yaron will stay on for a second term.

As expected, policymakers kept the benchmark rate at 4.75 its highest level since late 2006. It had raised rates 10 straight times in an aggressive tightening cycle that has taken the main rate from 0.1 in April 2022, before pausing at its July 10 meeting.

In keeping rates steady and breaking from the U.S. Federal Reserve which raised rates in July, the central bank said in a statement that economic activity remains strong, with a tight labour market. Inflation is broad and high but appears to be slowing.

Many economists believe the rate hike cycle is over and rate cuts will begin in 2024, although the Bank of Israel reiterated it saw a real possibility of having to raise the interest rate in the future if the inflation environment does not continue to moderate as expected.

Israel39;s annual inflation rate dropped to 3.3 in July from 4.2 in June, its lowest rate since March 2022 but above a government target range of 13.

Part of the path of inflation depends on the shekel , which is at a 312 year low versus the dollar. The exchange rate, which the central bank has said has a pass through of up to 20 on inflation, has weakened more than 8 so far in 2023.

It was down 0.5 to a rate of 3.815 per dollar in late afternoon…