* Current strategy remains valid, central bank chief says
* Tombini says policy stance will be adjusted when necessary
* He says Selic rate won't rise as high as in the past
By Alonso Soto and Silvio Cascione
BRASILIA, Feb 19 Brazil's central bank chief, Alexandre Tombini, reaffirmed on Tuesday that interest rates will remain at record lows for some time, but warned that policymakers will not hesitate to raise borrowing costs if necessary to keep a lid on prices.
His comments helped ease market expectations that the bank could hike rates as soon as April, but confirmed views that authorities are not ruling out tightening monetary policy later this year if inflation remains a headache.
The central bank faces the difficult balancing act of keeping rates at a level that stimulates an economy that has struggled to grow in the last two years while keeping inflation pressures at bay.
Brazil's inflation accelerated at the fastest monthly rate in nearly eight years in January, edging dangerously close to the ceiling of the official target of 4.5 percent plus or minus 2 percentage points.
In a bid to anchor inflation expectations, Tombini and other officials have said that they are not comfortable with annual inflation at 6.15 percent. However, they agree that inflation should ease later this year due to a smaller increase in the minimum wage, a stable exchange rate and moderate credit growth.
Tombini said that there is no risk of inflation spiraling out of control in Brazil.
"The central bank has been communicating its strategy, which remains valid so far. That doesn't mean, of course, that monetary cycles have been abolished," Tombini said. "When necessary, if prompted by the prospective inflation outlook, the central bank's monetary policy stance will be properly adjusted."
The bank, which has trimmed its Selic rate by 525 basis points to 7.25 percent in a little over a year, has repeated in its last three rate decisions that borrowing costs will remain on hold for a "sufficiently prolonged period".
"Tombini reaffirmed that rates will remain at this level for some time. He did not change his message," said Jankiel Santos, chief economist at Espirito Santo Investment Bank in Sao Paulo. "The central bank is sticking to its strategy."
Since taking office in 2011, Brazilian President Dilma Rousseff has been on a crusade to lower some of the world's highest interest rates to try to rekindle the more than 4 percent economic growth rates that made Brazil an emerging market star.
Tombini said that if the central bank does raise interest rates to curb inflation, it will not take them back to the high levels seen in the past as structural changes have allowed for a permanent drop in borrowing costs.
Under Tombini the central bank cut its benchmark Selic rate 10 straight times through October 2012. The next central bank rate-setting meeting will take place March 5-6.
Interest rate futures pared some losses on the Sao Paulo exchange, reaffirming bets on interest rate hikes later this year. Rate futures dropped earlier in the session on weaker-than-expected retail sales data.