MercoPress. South Atlantic News Agency

Brazilian president-elect plans to maintain central bank’s “operational autonomy”

Alexander Tombini, “strongest” candidate to replace Meirelles

Brazil’s President-elect Dilma Rousseff plans to maintain the central bank’s operational autonomy and also will keep the position of central bank president as a Cabinet-level post, according to reliable sources close to the leader.

Rousseff who takes office on January first will defer any decision on her pick to head the central bank until after she meets current chief Henrique Meirelles, added the sources. However the Brazilian press has mentioned possible names for the post.

During the recent central bankers meeting in Frankfort the Brazilian press quoted Meirelles saying he would stay in the post only if the president-elect grants him “absolute autonomy” to manage the bank. He also advanced he would not act as a “tampon” president after January first until his successor is named.

Yields on interest rate future contracts in Brazil rose across the board Monday amid speculation that Rousseff will replace Meirelles and end the central bank’s operational autonomy, potentially skewing policy in favour of economic growth at the expense of faster inflation.

The yield on the interest-rate future contract maturing April 2011, the most active Monday rose four basis points, or 0.04 percentage point, to 10.84%. The contracts maturing from July 2013 rose 20 basis points or more, while those due after July 2016 soared 30 basis points or more. The Real fell 0.4% to 1.7216 per dollar.

The meeting between Rousseff and Meirelles has yet to be scheduled, but Rio based newspaper O Globo reported on its website that Rousseff has ruled out keeping Meirelles on as the bank’s chief.

Apparently Rousseff considers the current central bank director for financial system regulation and organization, Alexander Tombini, as the “strongest” candidate to replace Meirelles, O Globo reported.

Tombini has a Ph.D. in Economics from the University of Illinois and an Undergraduate in Economics from the Universidade de Brasília (UnB). Alexandre was previously Senior Advisor of the Executive-Director and Member of the Executive Board, Brazilian Office, International Monetary Fund (IMF) in Washington D.C. ; Senior Advisor, Foreign Trade Board, Office of the Chief of Staff of the President of the Republic of Brazil; and General Coordinator of International Affairs, Secretary of Economic Policy of the Brazilian Ministry of Finance.

Finance Minister Guido Mantega will stay on at his post and was confirmed by president-elect Rousseff when he travelled with her to Korea for the recent G20 summit.