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UPDATE 1-Israel cenbank held rates on home price worries -minutes

(Adds details, central bank comments)

By Steven Scheer

JERUSALEM, Oct 9 (Reuters) - The Bank of Israel appears content to keep interest rates on hold for now due to fears of higher housing prices while the local economy should weaken as the global downturn persists, minutes of the discussions of last month's decision showed.

The central bank left its benchmark interest rate

at 2.25 percent for a third straight month on Sept. 24 -- a decision supported by all six monetary policy members.

It was the third straight unanimous vote for the MPC, which is expected to keep its key rate unchanged until the end of 2013, according to the Bank of Israel's own economists. A Reuters poll ahead of the decision showed that just 6 of 14 economists see one more cut by the end of 2012.

Bank of Israel officials pointed to a gap in economic activity this year, with stronger than expected growth in the first half but pessimistic expectations ahead due to downward revisions of global growth forecasts.

"In terms of exports, it was agreed that the current effective exchange rate provides a comfortable environment for continued export activity, though an additional slowdown in global activity is liable to make export development difficult," said the minutes, published on Tuesday.

Exports account for more than 40 percent of Israel's economic activity, while 60 percent of exports go to Europe and the United States.

In its rates announcement, the Bank of Israel raised its 2012 growth estimate to 3.3 percent from 3.1 percent but reduced its 2013 forecast to 3 percent from 3.4 percent.

Policymakers expressed concern that a decline in housing supply, combined with higher demand in home sales and in new mortgages "will lead to renewed price increases" after housing prices had been stable for the past 12 months.

At the same time, a recent spike in inflation was deemed as a one-off event due to supply factors such as higher energy and other commodity prices and an increase in local taxes.

(editing by Ron Askew)

((steven.scheer@thomsonreuters.com)(+972 2 632 2210)(Reuters Messaging: steven.scheer.thomsonreuters.com@reuters.net))

Keywords: ISRAEL RATES/MINUTES