* Strong economy warrants hike, loose ECB policy speaks against
* Impact on exchange rate a key factor
* Analysts split 50-50 on chances of hike
* Decision due at 1 p.m. (1100 GMT), news conference 14.15 p.m.
PRAGUE, Aug 3 (Reuters) - Czech policymakers may deliver their first interest rate hike since 2008 on Thursday and at the same time become the first EU central bank to embark on a new tightening cycle in more than five years.
A growing economy and signs of inflation will trigger a rate rise unless concerns prevail that a bigger premium over essentially non-existent euro zone rates would attract too much foreign capital.
The Czech economy is growing on both domestic and foreign demand, pushing the jobless rate to a nine-year low and wages up. House prices have also been growing strongly.
Consumer inflation stood at 2.3 percent in June, above the 2 percent midpoint of the bank's target but below the bank's forecast of 2.6 percent.
The bank ended its non-standard policy of keeping the crown currency's exchange rate weak on April 6 and has aims to lift interest rates from 0.05 percent to fully normalise policy.
The timing, though, is splitting the market. The bank's own forecasts see the first hike in the third quarter and half of analysts in a Reuters poll see a hike on Thursday.
But the market has been underpricing the chances of an immediate rate hike, with forward rate agreements not giving a chance to a Thursday hike and not yet fully pricing in a move by the next meeting in September.
Doubters say the bank may wait mainly because a hike could firm the exchange rate too much, make Czech assets even more attractive to euro-based investors.
The European Central Bank is still buying assets and keeping a negative deposit rate.
The ECB is expected to announce its next course of action in the autumn, indicating whether it will pare back its bond-buying once its current scheme expires at the end of the year.
"For the CNB (Czech central bank) the crown stability goal will be a short-term priority for as long as CPI inflation remains within the tolerable range," Raiffeisenbank said in a note, adding it expected a hike in the fourth quarter.
A firm crown would deliver monetary tightening and thus depress inflation, dumping the case for tightening via interest rates.
The crown has gained 3.3 percent since the floor at 27 per euro was abandoned in April after more than three years. A hike would bring the main repo rate most likely to 0.25 percent, analysts say.
It would be the first major move on a tightening path in this economic cycle in the EU. The last significant hike was Poland in May 2012, although Denmark cosmetically raised its main rate in January last year to maintain an exchange rate peg to the euro but has stood still since at -0.65 percent. The Czech bank's decision on Thursday will be based on a new inflation and economic forecast amid signs of continuing strong economic growth.
The Finance Ministry raised its growth outlook for 2017 to 3.1 percent on Monday. The bank's current forecast sees it at 2.9 percent.
The seven bank board members have been quiet on policy steps since the last rate meeting on June 29, where Governor Jiri Rusnok delivered remarks seen as hawkish by the market.
(Reporting by Jan Lopatka Editing by Jeremy Gaunt)