Shift Seen for Brazil Central Bank

President-elect Dilma Rousseff is expected to replace Henrique Meirelles as the head of Brazil’s central bank, according to a person familiar with Ms. Rousseff’s plans, confirming a change that has heightened concerns among investors that inflation may rise in Latin America’s biggest economy.

Ms. Rousseff, the person said, will meet with Mr. Meirelles on Wednesday to inform him of her decision and later in the day is expected to announce her choice for a successor, along with appointments to key economic cabinet posts. The announcement also is expected to confirm her recent decision to invite current Finance Minister Guido Mantega to retain his post when she takes office Jan. 1.

Ms. Rousseff was considering Alexandre Tombini, a longtime central-bank official and senior deputy to Mr. Meirelles, to succeed him at the helm of the central bank, the person said. A spokeswoman at Brazil’s central bank said the bank couldn’t comment.

Speculation over the potential changes in recent days has stoked investor fears about deviations from an economic-policy mix that under departing President Luiz Inacio Lula da Silva allowed Brazil to weather the global downturn and position itself to grow by more than 7% this year. The changes, some investors fear, will focus too much on government spending as a driver of economic growth and overlook some of the consequences that public spending can have on inflation.

Inflation—long a trigger for economic volatility in Brazil—has begun to creep upward in recent months.

On Tuesday, government data showed that Brazilian consumer prices continued to accelerate through mid-November as food prices surged for the third consecutive month. The data caused some economists to revise their full-year inflation forecasts to over 6%, compared with an official government target of 4.5%.

Mr. Meirelles, an inflation hawk who has served during both of Mr. da Silva’s four-year terms, often clashed with Mr. Mantega and other ruling-party advisers over interest rates and other economic policies. In a bid to keep the economy from overheating, Mr. Meirelles has insisted on maintaining a benchmark interest rate that ranks as one of the highest in the world.

Analysts say Mr. Tombini, his potential successor, would likely have a similar philosophy, though his relationship and influence over Ms. Rousseff would have to develop. Under Mr. da Silva, Mr. Meirelles enjoyed virtual autonomy at the central bank and was known to exert considerable sway over the president’s economic decisions.

His expected departure, then, remains unwelcome for many investors.

In a research note on Tuesday, Barclays Capital said it “raises the possibility that yet another leg of the policy framework that sustained macroeconomic stability—the inflation-targeting regime—could be at risk.”

Pedro Tuesta, senior economist at 4Cast, a New York-based currencies and money-markets research firm, said investors were already betting that Mr. Meirelles’ departure would lead to higher inflation. Yields on futures contracts linked to Brazilian interest rates rose on Tuesday, reflecting investor concerns.

“Investors believe the policy mix will be mostly expansionary and…will drive up inflation,” he said.