UPDATE 2-Changing course after nine years, Czechs lift interest rates

* Czech central bank raises main rate to 0.25 pct, from 0.05 pct

* Analysts were split 50-50 on chances of hike

* Strong economy warranted hike, loose ECB policy spoke against

* Crown firms 0.6 percent to new post-cap high

* News conference due at 2:15 p.m. (1215 GMT) (Adds analyst, more details, market)

PRAGUE, Aug 3 (Reuters) - Czech policymakers delivered their first interest rate hike since 2008 on Thursday, becoming the first European Union central bank to embark on a new tightening cycle in more than five years.

The move reflects a growing desire among central banks to move away from post-financial crisis ultra-loose monetary policy. Most -- including the Bank of England on Thursday -- have been unable to do so yet given uncertainty about growth and inflation.

But backed by their growing economy and above-target inflation, the Czech National Bank's board voted to raise the key two-week repo rate to 0.25 percent, from 0.05 percent where it had been since November 2012.

"They are certainly reacting to inflation developments and to signals of overheating in several segments of the economy, whether it is wages or real estate," Radomir Jac, chief economist at Generali Investments CEE, said.

"We see the crown moving now, but its future direction and reaction of financial markets will depend on ... the bank's new outlook."

The crown strengthened as much as 0.8 percent to 25.90 to the euro after the decision, its highest since the central bank abandoned a currency cap at around 27 per euro in April, its first step to normalising policy.

It traded at 25.94 at 1136 GMT.


The bank holds a news conference at 2:15 p.m. (1215 GMT) at which it will publish new macroeconomic forecasts which include an outlook for market rates.

A number of analyst have raised their forecasts for growth to beat 3 percent this year. The economy has been picking up pace, wages are rising in the EU's tightest labour market, and inflation has been above the bank's 2 percent target since December.

Housing prices are also soaring, fuelled by short supply and hot lending at record low rates.

At the bank's last meeting in June, Governor Jiri Rusnok had signalled a third-quarter rate hike was possible.

But markets had been split on how soon policymakers would move. Half of analysts in a Reuters poll had expected a hike by 20 basis points on Thursday.

Sceptics had said the bank would wait mainly because a hike could firm the exchange rate too much and make Czech assets even more attractive to euro-based investors at a time when the European Central Bank is still buying assets and keeping a negative deposit rate.

The Czech rate hike was 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.

(Reoprting by Jan Lopatka and Robert Muller Editing by Jason Hovet/Jeremy Gaunt)