UPDATE 1-Norway’s central bank holds interest rates, sees earlier hike

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OSLO, March 15 (Reuters) – Norway’s central bank kept its key interest rate unchanged at 0.50 percent on Thursday, but said it expected to raise borrowing costs “somewhat earlier” than a previous forecast of December.

Norway’s currency, the crown, strengthened against the euro after the bank’s decision, jumping to its highest level since November 2017.

All 13 economists polled by Reuters had predicted the bank would leave the deposit rate unchanged. Five saw a hike coming no later than September, while a further five expected it by the end of the year.

“The Executive Board’s current assessment of the outlook and balance of risks suggests that the key policy rate will most likely be raised after summer 2018,” central bank Governor Oeystein Olsen said in a statement.

Norges Bank also said the economy continued to recover after a slump in 2014-2016, with higher growth and lower unemployment predicted for 2018.

“Now there will be a rate increase this autumn. They signal a rate hike in September and then there is a small opportunity that they do it before that too,” said Kjetil Olsen, chief economist at Nordea Norway.

“But most likely it will be in September and the first one for a long time.

“They are upgrading their view slightly on the economy, and that is the main reason why they accelerate the rate increase a little.”

Oil producer Norway is gradually recovering from a drop in crude prices since 2014, with signs of improvements in the housing market and inflation picking up.

Reporting by Oslo newsroom; editing by John Stonestreet

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