OSLO: Norway's central bank kept interest rates on hold on Thursday, defying near-unanimous expectations for a cut and pushing the crown currency up more than 3 percent even as it virtually promised a rate cut before mid-year.

The bank said the crash in the price of crude oil, Norway's top export earner, has had only a modest impact on the economy, while house prices have continued to rise quickly, indicating that the pronounced downturn its December rate cut was aimed at preventing is not materializing.

Still, the bank said its current forecasts put the chances of a rate cut in the second quarter at 100 percent as oil prices are sliding further, European interest rates are falling and wage growth expectations are easing.

The cut could come either in May or June, with a bigger chance of a move in the latter, Gov. Oeystein Olsen said. But unlike its Scandinavian neighbours, Norway is not considering a rate change outside scheduled meetings, barring extraordinary events, he added.

The crown currency, down 7 percent against the euro in the past year to the rate decision, surged around 3.5 percent on Thursday, as markets had been confident of a cut, especially after neighbouring Sweden cut rates deeper into negative territory on Wednesday.

"Although the Norges Bank surprised ... the overall message is much closer to what markets had expected for the future," Tom Laskey, an investment manager at Aberdeen Asset Management,

said.

"The central bank is trying to buy time by keeping rate cuts on the table to let them assess oilís impact while keeping a cautious eye on rapid house price growth," Laskey said.

Also surprising markets, the bank kept its 2015 GDP forecast unchanged, predicting growth on the mainland — excluding offshore oil — at 1.50 percent, even as it nudged up its unemployment forecast and lowered its wage rise expectation.

"If economic developments ahead are broadly in line with projections, there are prospects for a reduction in the key policy rate," Olsen said.

Olsen also ruled out using any unconventional measures, saying that the interest rate was the bank's only policy tool in use.

Unlike the euro zone and even neighbouring Sweden, Norway is not fending off deflation and the bank expects core consumer prices to rise broadly in line with its 2.5 inflation target for the next three years.

Norway has been cautious in providing stimulus, even as central banks around the globe cut rates to record lows, as rapid house price and wage growth threatened to fuel inflation, potentially creating an asset bubble.

But Olsen said there was no real estate bubble now and the bank noted the financial regulator's new rules out this week aimed at tightening mortgage lending rules and slowing price growth.