Czech CPI matches 9-month high, rate hike on cards

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PRAGUE, July 11 (Reuters) - Czech consumer inflation inched up in line with forecasts in June to match a nine-month high, boosting the crown currency and cementing expectations that the European Union's lowest interest rates will rise this month.

The consumer price index (CPI), a broad gauge of inflation targeted by the Czech central bank (CNB), rose 0.3 percent in June from May , matching the median forecast of 14 analysts in a Reuters poll.

The monthly gain brought the annual inflation rate to 2.5 percent, from 2.4 percent in May, according to Wednesday's release by the Statistics Office. It matched April's level, which was the highest since September 2006.

The CNB had forecast 1.8-2.2 percent inflation for June in April's quarterly forecast. The May inflation number was already half a percentage point higher than that, prompting analysts to predict a 25-basis-point rise in interest rates this month.

"The June result fully supports the case for further interest rate hikes: a 25 basis point hike to 3.00 percent at the July board meeting is a done deal and at least one more rate hike will follow in the rest of the year," said Radomir Jac, chief analyst at PPF Asset Management.

The CNB has a 3 percent inflation target, with a tolerance band of 1 percentage point either side of that level.

Last month, policymakers held the main rate at 2.75 percent , taking a breather after a quarter of a percentage point rise in May to contain budding inflation pressures in the strong economy.

Markets have been bracing for further interest rate hikes in the coming months after inflation quickened and consumers helped to push the economy in early 2007 to its eighth consecutive quarter of 6-percent-plus growth.

Expectations of imminent policy tightening helped push the crown half a percent firmer to a one-month high of 28.450 to the euro by 0803 GMT.

Debt yields and money market rates tracked euro zone equivalents lower, having risen sharply over the past weeks.

Separately, a Labour Ministry report showed the jobless rate dipped to 6.3 percent of workforce in June -- a new long-term low -- from May's 6.4 percent.

The figure was also in line with analysts' expectations but it was likely to feed central bank concerns about rising wage pressures amid reports that companies are struggling to keep or hire workers amidst booming demand.