*

Maintains rate at 16-year high of 4.5%

*

Says restrictive policy still needed

*

Expects first cut in March, sees rate at 3.75% at end-2025

*

Norway economy holding up, but outlook uncertain

*

Sees worries over international trade

(Updates outlook in paragraphs 1, 4, adds analyst in paragraphs

11-12)

OSLO, Dec 19 (Reuters) - Norway's central bank held its

policy interest rate unchanged at a 16-year high of 4.50% on

Thursday, as expected, and said it now planned to cut rates

three times in 2025, down from four cuts seen previously.

"The committee judges that a restrictive monetary policy is

still needed to stabilise inflation around target, but that the

time to begin easing monetary policy is soon approaching,"

Norges Bank Governor Ida Wolden Bache said in a statement.

"Based on the committee's current assessment of the outlook,

the policy rate will most likely be reduced in March 2025,"

Norges Bank said.

The policy rate is now expected to decline to 3.75% by the

end of 2025, Bache said. Norges Bank, and analysts in a Reuters

poll, had earlier forecast a decline to 3.50% next year.

The Norwegian crown weakened to 11.79 against the euro

at 0958 GMT, from 11.76 just before the announcement.

The Norwegian monetary policy stance contrasts with other

Western central banks, most of which started cutting rates

already this year as growth slowed and inflation eased from the

highs of recent years.

Norway's economy has weathered relatively high interest

rates, economists said, helped by rising business investments

and wages, increased government spending and currency

depreciation.

Norges Bank said the economy was holding up better than

previously projected, while inflation pressures were more

subdued. Still, the outlook was unclear, it added.

"There is substantial uncertainty about the outlook for both

the global and Norwegian economy," it said.

The 28 participants in a Dec. 11-16 Reuters poll had

unanimously predicted the central bank would keep rates on hold

this week and almost all said it would start cutting in the

first quarter of 2025.

Brokers Nordea said the central bank appeared to be

concerned that by keeping rates on hold for too long, it could

constrict the economy.

"The committee is still fearing that unemployment could rise

too much if they do not cut rates soon," Nordea said.

Norges Bank highlighted the risk of a trade war between the

United States and China as one of the issues it discussed,

saying it "was concerned with the risk of an increase in

international trade barriers".

"Higher tariffs will likely dampen global growth, but the

implications for price prospects in Norway are uncertain," the

bank said.

The U.S. Federal Reserve on Wednesday cut rates by a quarter

percentage point, as expected, but said more reductions hinge on

further progress in lowering persistent inflation.

The Nordic country's core inflation accelerated in November

to 3% year-on-year from 2.7% in October, above the central

bank's 2% target.

The Swedish central bank earlier on Thursday cut rates by 25

basis points, in line with expectations, and said it may again

ease policy in the first half of 2025.

In Britain, the Bank of England is due to report the outcome

of its latest rate meeting later on Thursday, with economists

expecting no rate change.