UPDATE 1-Norway sees faster rate hikes after inflation surge
* Keeps rates on hold at 1.5 pct
* Sees rate hike next summer vs end 2014
* Cut 2013 mainland GDP growth to 1.75 percent from 2.5 pct
* Raises 2013, 2014 inflation forecast
OSLO, Sept 19 (Reuters) - Norway's central bank brought forward the point at which it expects to raise interest rates to combat a surprising surge in inflation, but said on Thursday weaker growth would keep increases gradual.
The bank, which as expected kept rates on hold at 1.5 percent, said its next hike will probably come in the summer of 2014, ahead of previous guidance for the end of 2014.
Inflation is a full percentage point above the central bank's June forecast, hitting around 2.5 percent years before the bank said it would.
"In June we thought it was more likely that rates would go down rather than up. Now we think it's most likely that they will be unchanged until next summer, then rise gradually... we see a fairly symmetrical risk," central bank Deputy Governor Jan Qvigstad said.
"Sometimes summer arrives in March, sometimes in June," he added.
The bank has been in a dilemma all summer after a string of big data surprises pulled it in opposing directions.
Growth in the economy, Europe's best last year thanks to a booming oil sector, came close to a halt in the second quarter, supporting calls for a rate cut. The weakening crown, an overheating housing market, and rising food and energy prices all add pressure for higher rates.
The bank lowered its 2013 forecast for growth on the mainland - excluding the volatile offshore sector - to 1.75 percent from 2.5 percent and cut its 2014 growth forecast to 2.25 from 2.75 percent.
But it also raised its 2014 core inflation forecast to 2.25 percent from 1.50 percent.
Ultimately, concerns over inflation were greater with analysts adding that a moderate fiscal loosening, expected by the incoming government, may have also played a role.
It also warned that years of rapid house price growth have created financial imbalances, raising the risk that price falls could trigger or amplify an economic downturn.
"House price inflation has slowed, but household debt continues to rise faster than income," the bank said, adding that banks need to hold a countercyclical capital buffer.