* Brazil central bank raises Selic 25 bps to 12.25 pct
* Monthly inflation slowing, 12-month rate above target
* Decision in line with market expectations
* Statement may indicate further rate hikes (Recasts adding that more increases could be coming, adds analyst quote, context, background)
By Isabel Versiani and Raymond Colitt
BRASILIA, June 8 Brazil's central bank raised its key interest rate for a fourth straight time on Wednesday as it seeks to rein in persistent inflation, and indicated more rate increases could be on the way soon.
Policymakers voted unanimously to raise the so-called Selic rate to 12.25 percent from 12 percent, a move all 21 economists in a Reuters survey expected.
In a statement that was nearly identical to that of its April rate hike, the bank said it had weighed risks to inflation and the still uncertain signs as to what extent Brazil's economic boom is slowing. [ID:nN0840076]
The bank said that, as a result, it believed that the "most adequate strategy" to bring inflation back down to the center of its target range next year was tight monetary policy "for a sufficiently prolonged period."
Keeping that phrase "makes it understood that the central bank is really going after the inflation target, at least in 2012, and that we can expect another rate hike in July," said Clodoir Vieira, the chief economist at the Souza Barros brokerage.
Brazilian interest rates: r.reuters.com/sej89r
Graphic on economic growth: r.reuters.com/tux38r
While monthly inflation is slowing after a surge on higher commodity prices and strong demand, 12-month inflation remains above the upper limit of the government's target, reaching 6.55 percent in May.
Central Bank President Alexandre Tombini has said the bank's policymakers are committed to ending the year with inflation as close as possible to the government target of 4.5 percent, plus or minus two percentage points.
Strong inflation puts Brazil among a group of powerhouse emerging markets, such as China and India, that are raising interest rates to try to control the price pressures that come with brisk growth.
In contrast, many developed markets, including the United States, find themselves trying to boost anemic growth by keeping interest rates ultra-low.
A HAWKISH TONE
At the central bank's last meeting on April 20, policymakers sounded hawkish, saying interest rates would stay high for a prolonged period and the economy faced risks from excessive wage rises.
That decision was divided. Two of the seven members of the COPOM voted for a 50 basis point hike, while five voted for a 25 basis point rise.
The central bank has now raised interest rates by 150 basis points since the beginning of the year. The government has also implemented so-called "macroprudential measures" such as credit curbs and says it is open to doing so again.
The cloudy inflation outlook means economists are less certain whether the central bank will have to raise rates again this year and how many times. The year-end forecasts of 14 analysts in the Reuters poll ranged from 12.25 percent to 13.25 percent, with eight analysts seeing the rate at 12.50 percent. [ID:nE5E7GR00V]
Pressure on the bank to tighten policy eased on Tuesday when the May reading of the benchmark IPCA price index BRCPI=ECI came in at the lowest in eight months on a sharp fall in fuel prices.
However, 12-month inflation will continue to speed up because last year's figures were so low, analysts say.
Bringing inflation back to target in Brazil is a tricky proposition. Sharply higher interest rates would risk throwing a wrench into Brazil's economic expansion, seen at around 4 percent this year from a hot 7.5 percent in 2010.
An abrupt rise in interest rates would also draw in more investors chasing Brazil's high yields with money borrowed at near-zero rates abroad. That influx has fueled a currency rally that has hurt exporters.
($1=1.581 reais) (Additional reporting by Jose de Castro in Sao Paulo; Editing by Brian Winter and Andrew Hay, Gary Hill)