Norway's central bank raised its benchmark interest rate today as widely expected, and said more hikes were likely next year.
But it said that would depend on the impact of a surge in coronavirus infections and the emergence of the Omicron variant.
Norges Bank's monetary policy committee raised its deposit rate to 0.50% from 0.25%, its second hike in three months.
The move was predicted by 20 out of 22 economists polled by Reuters and in line with the central bank's own plan.
"There is considerable uncertainty about the evolution of the pandemic and its effects on the economy. But if economic developments evolve broadly in line with the projections, the policy rate will most likely be raised in March," Norges Bank Governor Oeystein Olsen said in a statement.
The bank highlighted it had discussed the risks posed by the potential economic impact of the pandemic.
Should more restrictions be needed and lead to reduced economic activity through spring next year, "further rate hike smay be postponed," it said.
Norway's economy has rebounded this year and Norges Bank in September became one of the first central banks to hike rates since the start of the pandemic.
But the government this week again tightened restrictions to curb the spread of Omicron, announcing a partial lockdown that included a ban on serving alcohol in bars and restaurants for the next four weeks.
The bank said it was also concerned by a potentially higher-than-projected rise in domestic wages and prices causedby capacity constraints and persistent global price pressures.
"If there are prospects of persistently high inflation, the policy rate may be raised more quickly," it said.
Norway cut rates three times in 2020 to combat the impact of the Covid-19 pandemic, contributing to a boom in housing prices as borrowers took advantage of cheap credit.
