All six rate setters at the Bank of Israel supported raising the benchmark interest rate by 0.75 point to 2% at their Aug. 22 meeting, the central bank's minutes showed on Monday, in a sign of their escalating battle against inflation.

The hike, which was expected, was the fourth straight increase since April and the biggest in two decades. The central bank is widely expected to continue its tightening cycle during the rest of 2022 to curb increasing price pressures, with the key rate reaching as much as 3%.

One more decision is scheduled - on Oct. 3 - before a Nov. 1 general election.

"The committee members noted that the Israeli economy is recording strong growth, accompanied by a tight labour market and an increase in the inflation environment," the minutes said.

It added that the pace of future hikes will be determined by inflation and other economic data.

Israel's annual inflation rate jumped to a 14-year high of 5.2% in July from 4.4% in June. But policymakers pointed to bond market expectations of the rate moving back within the government's 1-3% target range next year.

Still, the central bank remained concerned that the tight labor market, in which the jobless rate is around 3.5%, "is reflected in wage pressures in industries characterized by high wages and professional workers".

It added that the jobs market is similar to and even slightly better than pre-COVID levels, while home prices continue to jump.

Israel's economy grew an annualised 6.8% in the second quarter from the prior three months and policymakers expressed some concern over a shortage of workers that limits the ongoing activity of businesses in certain industries. (Reporting by Steven Scheer; editing by Philippa Fletcher)