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PRAGUE, July 11 (Reuters) - The Czech central bank believes the Czech economy is on track to meet its growth forecast, according to the minutes of its last policy meeting, making an interest rate hike in the current quarter more likely.
After the meeting on June 29, Governor Jiri Rusnok had said that if the Czech National Bank (CNB)'s growth forecast was met, it could raise rates in the third quarter, and then again in 2018.
The Czech GDP rose by 3.0 percent year on year in the first quarter, surpassing the bank's forecast of 2.5 percent.
It would be the first rise in Czech borrowing costs in nearly a decade and the first in the region.
Interest rates around the world are at record lows but now a number of central banks are indicating possible rate hikes. The U.S. Federal Reserve raised has borrowing costs twice this year already.
The European Central Bank's asset-buying stimulus programme is expected to end later this year.
The CNB, which has held its benchmark rate at 0.05 percent since 2012, took its first policy tightening step in April when it abandoned a currency cap put in place three years prior to keep the crown weak.
At the June meeting, the central bank voted 6-0 to leave rates unchanged for now, its minutes, published on Tuesday, showed.
"The opinion was expressed that before raising interest rates, there was a need to be sure that the inflation pressures arising from the domestic economy were robust enough to outweigh any anti-inflationary shocks stemming from abroad," the minutes said.
Inflation accelerated to 2.4 percent in May from 2.0 percent in April, moving into the upper half of the central bank's target band of 1-3 percent.
The bank is also contending with a hot mortgage loan market and rising housing prices and has put higher capital buffer requirements on banks in order to calm the markets down. It is also seeking new legislative powers to deal with this.
The crown was 0.2 percent weaker on the day, trading at 26.146 at 0819 GMT, off a post-cap high of 26.048.
However, some saw the minutes as showing a weakening in the bank's intention to raise borrowing costs.
"The minutes sent a less clear signal regarding rate hikes than the news conference," ING's chief economist Jakub Seidler said in a note.
A hike in the third quarter would come sooner than expected by analysts in a Reuters poll, in which eight out of 14 respondents saw such move in the last quarter of 2017.
The market is pricing in higher interest rates later, sometime early in the first quarter of 2018. (Reporting by Robert Muller; Editing by Jason Hovet and Raissa Kasolowsky)