UPDATE 1-Norway central bank keeps rates on hold, repeats plan to hike in Sept

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(Adds quotes, economist)

OSLO, Aug 16 (Reuters) – Norway’s central bank kept its key policy interest rate unchanged at a record low 0.50 percent on Thursday, as expected, and reiterated plans for a hike next month.

“The upturn in the Norwegian economy appears to be continuing broadly in line with the picture presented in June,” the bank said. “Underlying inflation is below the inflation target, but the driving forces indicate that it will rise further out.”

A policy tightening, Norges Bank’s first in seven years, would come despite inflation being significantly below target, as higher oil prices, a rebound in the housing market and accelerating growth drive the need for higher rates.

“Rates will rise in September unless something very unexpected were to happen,” DNB Markets economist Jeanette Stroem Fjaere wrote on Twitter.

Norway’s currency, the crown, was little changed after the bank’s decision. (Reporting by Camilla Knudsen; editing by David Stamp)

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