OSLO, June 22 Reuters Norway39;s central bank Norges Bank raised its key policy rate by 50 basis points bps to a 15year high of 3.75 on Thursday in a bid to curb inflation, and said it aimed for another hike in August, predicting the rate would rise to 4.25 during the autumn.

The increase was bigger than expected. Of the 32 economists polled by Reuters, 24 had forecast an increase of 25 bps, while eight correctly anticipated an rise of 50 bps.

If we do not raise the policy rate, prices and wages could continue to rise rapidly and inflation become entrenched, Norges Bank Governor Ida Wolden Bache said in a statement.

Norway39;s core inflation rose to 6.7 in May, the highest on record and above the central bank39;s forecast of 6.0.

The Norwegian currency, the crown, surged to 11.55 against the euro at 0832 GMT from 11.69 just before the announcement.

A higher policy rate than previously signalled is needed to bring inflation down to target, Norges Bank said, while warning that the policy rate might have to go higher than project if the crown turns out to be weaker than assumed or pressures in the economy persist.

At the same time, the effects of past rate hikes are not yet fully evident in the economy, Norges Bank added.

If inflation declines more rapidly or there is a more pronounced slowdown in the Norwegian economy, the policy rate may be lower than currently envisaged, it said.

In May, Norges Bank had said it would most likely hike again in June, and…