(Recasts with central bank director comments and rewrites throughout)
By Alonso Soto
BRASILIA, Sept 29 (Reuters) - Brazil's central bank on Monday signaled it will keep interest rates on hold for some time, but warned that policymakers would not hesitate to tighten monetary policy if inflation fails to subside.
Carlos Hamilton de Araujo, the bank's director of economic policy, told reporters the bank is only considering raising or keeping its benchmark Selic rate on hold.
"If the inflation outlook requires it, monetary policy should be and will be promptly triggered," said Araujo.
Earlier on Monday the central bank said it expected inflation to slowly ease toward the center of the government's target in coming years, suggesting no need to adjust rates at this moment.
The central bank has kept interest rates steady for three straight monetary policy meetings, resisting pressure to stimulate a slowing economy ahead of Sunday's presidential elections.
Sluggish growth and high inflation are some of the main concerns for Brazilians in an election that has pitted President Dilma Rousseff against two pro-market candidates who blame her for sinking the economy into recession.
In rare comments about a hot campaign topic, Araujo said he supports the legal autonomy of the central bank, distancing himself from board colleague Anthero Meirelles who backs the current policy of operational autonomy.
Rousseff, a leftist economist, has accused her closest rival Marina Silva of seeking to benefit private bankers by granting independence to the central bank. Environmentalist Silva said only a truly autonomous bank could restore investors' confidence in the once-booming Brazilian economy.
Polls showing Rousseff holding a slight lead over Silva in a likely second round run-off vote on Oct. 26 triggered a plunge in local shares and the currency on Monday.
Araujo suggested the central bank may use monetary policy to counter the effects a weak currency could have on inflation. Earlier in the day, the real hit its weakest level in nearly six years.
In its quarterly inflation report, the bank lowered its 2014 economic growth forecast to 0.7 percent from its previous estimate of 1.6 percent. The revised forecast remains above market economists' median estimate for 0.29 percent growth in 2014, according to a central bank poll also released on Monday.
The bank lowered slightly its 2014 inflation forecast to 6.3 percent from 6.4 percent. For 2015, the bank raised its inflation forecast to 5.8 percent from 5.7 percent previously.
The bank sees annual inflation then easing to 5 percent in the third quarter of 2016, but still above the 4.5 percent center of the government's target. (Additional reporting by Luciana Otoni and Silvio Cascione; Editing by W Simon and Richard Chang)