March 12, 2019 / 9:19 AM / 5 months ago

UPDATE 1-Norway survey sees firm growth, points to March rate hike

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OSLO, March 12 (Reuters) - Norwegian companies are expecting the pace of output growth to remain firm in the next six months after a strong showing during the latest three-month period, a central bank business survey showed on Tuesday.

The poll will be among the key factors determining the outcome of Norges Bank’s monetary policy announcement on March 21. The board is widely expected to raise its key policy rate for only the second time in eight years.

“The upswing among Regional Network contacts continues, and growth is expected to remain firm over the next half-year,” the central bank said in a statement.

“Contacts plan to increase investment ahead, and planned growth is slightly higher than expected in the previous survey,” it added.

The survey further boosted the value of Norway’s crown currency against the euro, a day after Statistics Norway data showed core inflation far exceeding expectations in February.

By 0912 GMT the crown traded at 9.7279 against the euro, strengthening from 9.7442 just ahead of the 0900 GMT release.

“As we expected, very small changes in growth expectations for the next six months, well supported by growth in the oil supply industry. Economic growth maintains itself well and supports a rate hike by Norges Bank next week,” Handelsbanken said in a tweet.

The central bank increased its key policy rate to 0.75 percent from 0.50 percent in September, the first rate hike since 2011.

The Norwegian economy has recovered strongly after a slump in the oil sector in 2014-16 that was primarily caused by low crude prices. The Nordic country is Western Europe’s largest oil producer. (Reporting by Terje Solsvik, editing by Gwladys Fouche)

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