UPDATE 1-Brazil cuts rates to all-time low, signals more easing ahead

(Adds details on statement, context)

SAO PAULO/BRASILIA, March 21 (Reuters) - Brazil's central bank cut interest rates to an all-time low on Wednesday and signaled it is likely to pursue an additional reduction at its May meeting as inflation continues to underwhelm.

The bank's nine-member monetary policy committee, known as Copom, cut the benchmark Selic rate by 25 basis points to 6.50 percent, capping a 775 basis-point decline since October 2016.

The move had been widely expected by economists in a Reuters poll, though most had predicted that this week's reduction would be the last in the deepest easing cycle in over 10 years.

But policymakers were explicit in forecasting an additional cut, highlighting the bank's struggles to lift inflation back to its target after undershooting it for the first time ever last year.

"Regarding the next meeting, at this time the Copom views an additional moderate monetary easing as appropriate," the bank's policy statement said. "The Committee judges that this additional stimulus mitigates the risk of delayed convergence of inflation toward the targets."

Double-digit unemployment rates and widespread idle capacity have kept a lid on price hikes as the economy recovers from its deepest recession in decades at an uneven pace. (Reporting by Bruno Federowski and Marcela Ayres; Writing by Bruno Federowski Editing by Tom Brown and Sandra Maler)