3 MIN. DE LECTURA
(Adds fresh analyst comments and context)
By Alonso Soto and Silvio Cascione
BRASILIA, Nov 6 (Reuters) - Brazil's central bank has signaled it could keep raising interest rates as board members agreed inflation risks were rising despite fears that the economy could remain stagnant.
In the minutes of its last rate-setting meeting released on Thursday, the central bank said it would remain especially vigilant in the battle against persistently high inflation.
In a split vote last week, the central bank surprised markets by raising its benchmark Selic rate by 25 basis points to 11.25 percent, a move that many interpreted as a sign newly re-elected President Dilma Rousseff would adopt more market-friendly policies.
The dissenting voters said they wanted to keep rates on hold for the moment because of uncertainty about the impact price adjustments could have on inflation.
However, they agreed with the majority that inflation risks had increased since the September meeting due to a rise in some government-administered prices like electricity and to currency depreciation.
"If someone still thought that the 25 (basis point) rate hike was an isolated event, then the minutes prove that is not the case," said economist Enestor dos Santos of BBVA in Madrid. "This is the start of a rate hiking cycle."
Dos Santos said the pace of future rate hikes would depend on whether the government can keep a lid on public spending and on the magnitude of the currency depreciation. The real has slid 11 percent since September, raising the cost of imports.
Espirito Santos Investment Bank chief economist Jankiel Santos said the central bank was hinting that the tightening cycle would be less aggressive this time around.
"They are less hawkish than I expected because they still see inflation converging to the target in 2016," Santos said. "The message is that they will not pick up the pace of rate hikes or keep raising rates for too long."
In its last tightening cycle, the bank raised rates by 375 basis points between May 2013 and April.
Central bank President Alexandre Tombini faces the delicate task of easing inflation without dragging the world's No. 7 economy back toward recession. The Brazilian economy fell into recession in the first half of the year after a sharp drop in investment.
Although the economy probably pulled out of recession in the third quarter, activity remains lackluster.
Even with a sluggish economy, inflation remains high and is expected to have stayed above the ceiling of the official target of between 2.5 percent and 6.5 percent in October.
Economists say an aggressive cut in public spending is crucial for bringing inflation back to the center of the official target.
In the minutes, the central bank said the government's fiscal position had turned expansionist, or inflation-negative, this year but could be neutral to inflation in the future. (Editing by W Simon and Lisa Von Ahn)