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UPDATE 2-Norway rates on hold amid surprise currency weakness - central bank governor

Victoria Klesty

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* Crown hit all-time lows vs trading partners last week

* C.bank sees weak crown as 'buffer' against downturn

* Must avoid inflation spiral, governor says (Combines stories, adds currency, inflation comments)

OSLO, Nov 4 (Reuters) - Norway's crown currency has weakened more than expected, but the central bank will not change its monetary policy unless it sees a risk of spiralling inflation, Norges Bank Governor Oeystein Olsen said on Monday.

The crown last week hit an all-time low of 10.31 to the euro and has fallen by almost 8% since June to its weakest level on record against a broad basket of trading partners' currencies.

"The crown has weakened to a surprisingly low level," Olsen told business leaders at a conference organised by the central bank.

"It's hard to explain, but obviously it has much to do with the international investment community seeking Swiss franc and U.S. dollars, which are seen as more of a safe haven," he said.

Olsen reaffirmed the central bank's commitment to keeping the key policy interest rate at 1.5% for the time being, adding that only a sustained change in the inflation outlook could lead to a change of course.

The central bank's board in September raised the cost of borrowing for the fourth time in 12 months but has since said it is committed to keeping rates on hold amid signs of a global economic slowdown.

"The Executive Board's current assessment of the outlook and balance of risks suggest that the policy rate will mostly remain at this level in the coming period," Olsen said in prepared remarks.

Currency weakness would not in itself give cause for changing policy, he said when asked by the audience.

"It's an advantage to have the crown rate as a buffer, but if it weakens further, it will affect prices. And if that leads to a price spiral ... then we come into a situation where the central bank needs to act," Olsen said.

"But until then we have to stay calm," he added.

Among the reasons for the crown's weakness is a perception among some investors that the Norwegian economy faces a difficult transition from its current reliance on oil and gas exports, as the world adopts more renewables, Olsen said.

"The weak crown will, in isolation, affect the price level ... but what is crucial with regard to future rate decisions is our assessment on whether this is temporary, and most importantly, whether it is going to affect wages," the governor told Reuters on the sidelines of the conference.

But despite a rise in the cost of imports, Norwegian wages were unlikely to deviate from the central bank's forecasts of 3.3% to 3.4% growth per year, Olsen added.

At 1045 GMT the crown traded at 10.1460 to the euro, slightly weaker than the 10.1430 seen just ahead of the 0800 GMT speech. (Writing by Terje Solsvik; Editing by Alison Williams)