(Recasts with Czech rate hike) WARSAW, June 23 (Reuters) - The Czech crown firmed on Wednesday afternoon as the central bank governor said monetary policy is likely to have entered a phase of gradual tightening after the bank raised rates for the first time since early 2020. The Czech central bank’s board voted on Wednesday to lift its key two-week repo rate by 25 basis points to 0.50%, delivering the second rate hike in as many days in Central Europe after Hungarian policymakers raised borrowing costs on Tuesday. “With further increases in interest rates the default option, the only uncertainty about Czech monetary policy is how far rates will go over the coming quarters,” said Liam Peach, emerging markets economist at Capital Economics. The crown was 0.51% firmer against the euro at 25.388. Interest rate swaps moved up 4-7 basis points. “(Rates moved) very high, in my view the presser was very hawkish,” a trader said Central and Eastern Europe has the highest inflation in the European Union, and on Tuesday the Hungarian central bank became the first in the bloc to launch a cycle of rate hikes to combat growing price pressures in the aftermath of the COVID-19 pandemic. It raised its base rate to 0.9% from 0.6%, a slightly bigger hike than analysts had expected, and said it would review the need for more hikes on a monthly basis. The Hungarian forint was 0.11% firmer at 350.70. “The central bank surprised to the hawkish side by saying that it will deliver further hikes on a monthly basis ... Moreover, the statement had a clear hawkish shift in tone as far as inflation risks are concerned,” Morgan Stanley said in a note. In Poland, where the central bank has struck a much more dovish tone than its Czech and Hungarian counterparts, the zloty softened 0.1% to 4.5263. (Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague, Radu-Sorin Marinas in Bucharest and Anita Komuves in Budapest; Editing by Giles Elgood) Our Standards: The Thomson Reuters Trust Principles.