UPDATE 2-Norway cbank head signals no rush to hike rates

* Says bank's primary policy concern is inflation

* Aug inflation rate was 1.2 pct vs bank's 2.5 pct target

* Says bank has room to move in either direction on rates (Recasts and updates)

OSLO, Sept 20 (Reuters) - Norway's central bank will focus on inflation among conflicting policy goals at its next rate-setting meeting, the head of the bank said on Thursday, suggesting he is in no hurry to raise borrowing costs.

"We cannot overburden monetary policy," Oeystein Olsen told a business forum. "In weighing the various considerations, we will in our interest rate setting adhere to the primary objective of monetary policy - low and stable inflation."

Norway's core inflation rate slowed to 1.2 percent in August and is expected to remain below the central bank's 2.5 percent target for several years to come.

The central bank, which next meets on Oct 31, has predicted a rate hike in December or the first half of next year, but some analysts said that, following the August inflation reading, it would have to delay the move.

Olsen said a hike over that timeframe was not a foregone conclusion. "We still have room for manoeuvre in interest rate setting - in both directions."

The bank would not look at inflation only, however, with other factors including the long-term impact of very low rates, a developing housing bubble, the impact of Europe's financial turbulence and a near-record strong currency.

"If monetary policy only took into account the low level of inflation, the key policy rate would be rapidly reduced," he said. "In the light of the trade-off against other considerations, however, the bank does not want to accelerate the pace of inflation."

Norges Bank is keen to raise rates to cool a domestic economy that grew by an annual 5 percent in the second quarter.

Any rate hike would push the crown stronger, further cutting the inflation rate, and Olsen said the bank would also not tolerate too strong a crown for too long.

But low rates threatened to fuel Norway's developing housing bubble "The high household debt burden in Norway represents a risk of financial instability in the longer term," he said. (Reporting by Balazs Koranyi; Editing by Jeremy Gaunt, John Stonestreet)