* Raises 25 bps to 5.5 percent, first rise in more than two yrs
* Statement warns more may be needed, govt says disagrees
* Points to market concerns, risks of higher inflation
* Hungarian forint, bonds, stocks extend losses
(Recasts with comments, prices, govt reaction))
By Sandor Peto and Marton Dunai
BUDAPEST, Nov 29 (Reuters) - Hungary's central bank unexpectedly raised interest rates on Monday and said it could do so again, but the first hike in the EU's emerging east since the economic crisis began did not help stem the falling forint.
Raising the base rate to 5.5 percent, rate setters said Hungary's risk profile was deteriorating following a string of measures by the new right-of-centre goverment that have rattled markets, and by growing worry over the euro zone periphery.
The government criticized the move, which it said was not justified by economic or budget trends -- further widening its rift with the central bank.
A Reuters poll conducted last week showed only one of 21 analysts expected the bank to raise rates, with the rest seeing them on hold..
The hike was the first since October 2008 and followed six months of no change, although policymakers had warned government tax measures -- including income tax cuts in 2011 and new taxes on some business sectors -- would put pressure on inflation.
"The Monetary Council has decided to raise the base rate in light of inflation remaining persistently above the 3 percent target as well as the upside risks to inflation," the bank said in a statement.
"It may be necessary to increase the base rate further in the coming months in order to meet the inflation target."
The NBH said its economists had lifted their average inflation forecast to 4.0 percent from 3.5 percent for 2011, although Governor Andras Simor said the Monetary Council saw upwards inflation risks even compared to the new forecasts.
But analysts said they also saw the move as a bid to arrest a slide in the forint that has accelerated since the government revealed a plan to scrap private pension funds, the latest in a series of steps meant to plug a fiscal gap but avoid cutbacks.
They also said it looked like an assertion of independence after a string of government attacks, including a plan to change the central bank law to load the board with its own nominees and urging the bank to keep monetary policy loose.
The forint traded at 283.32 to the euro at 1609 GMT, weaker from 280.84 prior to the rate decision, and near an 11-week low. Government bond yields traded at 15-month highs and the Budapest Stock Exchange's main index shed 2.6 percent to a five-and-a-half month low.
GOVERNMENT-SPAWNED RISK
Simor noted that Hungary's risk premium had risen since the government agreed to achieve a fiscal deficit of 3 percent of gross domestic product in 2011.
But he added that the flurry of surprising government measures that have confounded markets also make it difficult to produce forecasts and make decisions for rate setters.
"Hungary's risk assessment has deteriorated in the past two months. This has global and local causes... We are trying to produce forecasts and make decisions in an extraordinarily uncertain environment," he said.
"We face new and new (government) measures every day, whose impacts we are trying to analyse and take into account."
The government said last week that it would give a parliamentary committee the right to appoint the four new rate setters whose mandate expires next year, stripping Simor of the right to nominate two rate setters.
News portal index.hu said on Monday that the move -- which would give the new appointees a majority in the Monetary Council -- paved the way for a government plan to make the bank lift its inflation target to 3.5 percent from 3 percent.
"I hope very much that this is a hoax," Simor said. "If the rules change, that is a factor to cause uncertainty and uncertainty is a factor which increases the risk premium."
Timothy Ash, analyst at RBS, said ties between the bank and the government had sunk to a new low just as risk aversion rises among investors worried about the euro zone's weakest countries.
That has been exacerbated by warnings from rating agencies that they may cut their view of Hungary's creditworthiness if the government does not begin pursuing credible fiscal policies.
"We would continue to recommend reducing exposure until the situation in terms of ongoing pension reform, ratings and indeed relations between the government and the NBH clarify," Ash said.
The forint is the worst performing currency in the European Union's emerging east, having fallen 4.5 percent since early October.
Some analysts said the central bank may raise interest rates further before March, when the composition of the Monetary Council will change and the bank might move in the direction of softer monetary policy to please the government.
"Today's move is probably not enough to prompt a significant strengthening of the HUF and will probably not prevent further weakening in the near term -- we see the move most as a signal that more may come, if necessary," said Anders Svendsen of Nordea. (Writing by Gergely Szakacs and Michael Winfrey; Editing by Patrick Graham and Catherine Evans)