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By Jamie McGeever
BRASILIA, April 13 (Reuters) - Brazil's central bank is likely to raise interest rates by 75 basis points for a second time to 3.50% at its next meeting in early May, but "nothing is written in stone," central bank chief Roberto Campos Neto said on Tuesday.
In an interview with Bloomberg TV, Campos Neto also said that while current inflation and the risk of inflation expectations rising warranted further rate hikes, the economy still needed stimulative policy.
He repeated his view that rising commodity prices and currency weakness have fueled inflation, but there is no "structural" contamination of longer-term inflation. This means the bank can maintain its 'partial normalization' policy.
"Unless something extraordinary happens, we don't see anything other than 75 basis (points) which is what we indicated. But nothing is written in stone," Campos Neto told Bloomberg TV.
The bank's rate-setting committee, known as Copom, raised the benchmark Selic rate to 2.75% from a record-low 2.00% in March - more than most economists had expected - and indicated it would repeat the dose in May.
Annual inflation is above 6%, well above the central bank's year-end goal of 3.75% and likely to continue rising in the coming months before easing.
Asked if he sees the Selic rate reaching its so-called neutral level this year, thought to be around 6%, Campos Neto played down the prospect.
"There is always a risk that short-term inflation starts contaminating the long end and that is why we decided to move more than the market expect(ed). Moving more has greater efficiency and in the end, we need to do less," he said.
"We need to move rates but still be on stimulative ground," he added.
Campos Neto also said the central bank remains vigilant on how the exchange rate is affecting inflation. But the real has stabilized in recent weeks in line with policymakers' expectations, and there are no plans to intervene unless there is evidence of market dysfunction, he added. (Reporting by Jamie McGeever Editing by Chris Reese and Sam Holmes)