By Alonso Soto

BRASILIA, Nov 27 (Reuters) - Brazil will likely raise interest rates for the sixth consecutive time on Wednesday, taking borrowing costs back to double digits as policymakers race to contain naggingly high inflation in Latin America's largest economy.

An overwhelming majority of analysts polled by Reuters last week expect the central bank to hike its benchmark Selic rate a half a percentage point to 10 percent -- the highest since March 2012.

The return to double digits is considered a political setback for President Dilma Rousseff, who made lower rates a key economic goal of her government. The Selic stood at 10.75 percent when she took office in 2011.

After raising rates early in her term, the central bank aggressively slashed the Selic to a record low 7.25 percent in October 2012. The government had hoped the cuts would usher in a new era of cheap credit and sustained economic growth.

However, lower rates failed to speed up the economy, which was held back by another historical drag on Brazilian growth - high inflation. Inflation forced the central bank to change course, raising the benchmark rate by 2.25 percentage points since April in a bid to bring annual inflation back to the 4.5 percent center of its target range.

"The central bank has to keep hiking rates to mitigate some risks, principally market inflation expectations that are systematically above the center of the target," said Andre Perfeito, chief economist with Gradual Investimentos in Sao Paulo. "Without much help from the government it is up to the central bank to fix the credibility problem."

He expects the bank to increase rates to 11 percent next year to control prices and reduce inflation expectations. The bank is supposed to set rates in a way that keeps consumer price inflation close to a 4.5 percent-a-year target plus or minus 2 percentage points.

The central bank has raised rates much more than expected this year, regaining some of its credibility as an inflation fighter even as the inflation rate remains above the center of the target range.

At the same time, the central government is struggling to convince markets it is ready to control spending in order to avoid a sovereign downgrade next year.

The erosion of government accounts comes as spending grows faster than revenue. Service-industry costs are also rising and government-controlled prices such as bus fares and fuel prices are expected to increase.

This has prompted investors and analysts to bet that interest rates will keep climbing next year. Most economists expect Brazil to raise rates to 10.50 percent next year, according to the latest weekly central bank survey.