The minutes of the Czech central bank's Sept. 27 meeting showed policymakers expected the rate path would be higher than the bank's latest outlook implied but they also discussed whether it might be possible to start to cut interest rates at the end of this year.

Markets are betting the Czechs will follow peers in Hungary and Poland and start cutting interest rates before the end of this year as inflation heads back toward target.

The Czech central bank minutes showed Governor Ales Michl saying monetary policy needed to be kept tight for longer given the outlook for core inflation, which would be above the target for all of next year.

In the debate, Jan Prochazka, one of seven members of the bank's board, noted inflation would go up in the last three months of 2023.

"The need not to disrupt the downward trend in inflation expectations (which are highly adaptive) might thus imply that the first cautious rate cut could be made at the end of this year," the minutes followed.

"(Board member) Jan Kubicek also felt that the reduction should not be very forceful to begin with."

The minutes cited Vice-Governor Jan Frait as not ruling out discussion of a first cut in November, although he "emphasised" a need to proceed cautiously.

Board member Tomas Holub had the view that "it made sense" to head to lower rates this year, as waiting until the first meeting in 2024, in February, "would, under the baseline scenario of the current forecast, subsequently require more forceful downward steps in rates."

Vice-Governor Eva Zamrazilova said the crown's weakening in the past month had delivered easing of roughly 25-50 basis points but the outlook for the currency was uncertain, according to the minutes.

"The exchange rate represented a large uncertainty going forward as well, so in her view it was delaying the decision to reduce interest rates," the minutes said.

The bank has two more policy meetings this year, on Nov. 2 and Dec. 21. (Reporting by Jason Hovet, editing by Jan Lopatka and Susan Fenton)