OSLO, Norway - March 17, 2011 - Is there a march to raise interest rates in the face of the disaster in Japan? Some investors are starting to doubt it, but the threat of inflation means most rate hikes are likely to go ahead.

Before the earthquake, central banks around the world were gearing up to tighten policy. Now markets are scaling back their pricing of future rate rises, as it becomes clear the damage to Japan's economy could be worse than originally thought.

But unless there is a widespread, long-term crisis over Japan's nuclear power plants, the economic impact on the rest of the world still does not seem as if it will be nearly large enough to alter central banks' intentions.

"The good news/bad news is that Japan has not been an engine of global or Asian growth for some time," said IHS Global Insight chief economist Nariman Behravesh. "This means that the impact of much lower Japanese growth on the world economy will probably be limited and small."

Norway's central bank signalled on Wednesday it would raise interest rates slightly sooner than originally expected because inflation was picking up. It kept its key interest rate flat but issued a forecast implying a hike by June.