Brazil’s Meirelles Will Join Country’s Biggest Political Party

Brazil central bank President Henrique Meirelles will join the country’s biggest political party today, setting the stage for a possible run for office next year.

Meirelles, 64, will join the Brazilian Democratic Movement Party, known as the PMDB, according to a statement read by a press officer at the central bank yesterday. He made the decision after talking to President Luiz Inacio Lula da Silva.

The former FleetBoston Financial Corp. banker, after taming inflation in almost seven years on the job, helped Brazil emerge from the global recession in the second quarter by lowering interest rates to a record 8.75 percent. Economists have speculated that he’ll most likely run for office in his home state of Goias or seek to become the vice-presidential candidate as cabinet chief Dilma Rousseff runs for the top job.

“It’s very important for the people of Goias and for the PMDB, given his importance for what he represents in Lula’s government,” Iris de Araujo, the party’s acting president, said in a phone interview from Brasilia.

Meirelles said yesterday that he intends to stay as the central bank’s president at least through March, adding that he hasn’t decided to become a candidate for any office.

The central bank chief is a close adviser to Lula and is credited with resisting pressures within the president’s Workers’ Party for looser lending. His departure is unlikely to be immediately felt on monetary policy, said Christopher Garman, Washington-based analyst for the Eurasia Group.

Possible Successor

His likely successor, current director for financial regulation Alexandre Tombini, “would probably be less effective than Meirelles in managing Lula’s expectations,” Garman wrote in an e-mailed note yesterday.

An appearance in August alongside Lula at a political rally in Goias has fueled speculation that Meirelles would run for the senate or governor of his home state, a rural backland better known for its thorn-filled pequi fruit than high finance.

Lawrence Fish, former chairman and chief executive officer of Citizens Financial Group Inc., said Meirelles has learned a lot working alongside Lula the past seven years.

“They have great mutual admiration for one other,” Fish, who met Meirelles while an economics instructor in Rio de Janeiro in the 1960s for a U.S. government aid program, said in an interview before his announcement. “One is experienced politically and the other economically. They’ve grown to understand that each has a lot to learn from the other.”

During his first policy meeting in 2003, Meirelles surprised investors by raising the benchmark rate to 25.5 percent to bring down inflation that peaked at 17.24 percent in May of that year. In August, inflation fell to 4.36 percent, below the government’s target for the first time since 2007.

Meirelles lowered the benchmark interest rate to a record 8.75 percent this year, from 13.75 percent in January, helping jumpstart lending that allowed Brazil to become one of the first countries in the world to emerge from the global recession in the second quarter.