Brazil's central bank chief Henrique Meirelles appears more likely to stay in office until the end of the year after distancing himself from a run for the governorship of his home state in October elections.
The prospect of the respected Meirelles leaving his post to pursue political ambitions has been a source of concern in markets, with some analysts saying it could increase volatility in Brazilian assets as October national elections approach.
Meirelles, Brazil's longest-serving central bank president, said on Thursday the centrist PMDB party was free to choose a candidate for governor of Goias, reiterating he would only make a decision about the job at the end of March.
Local media have reported Meirelles could also run for a seat in the Senate or for the Brazilian vice-presidency as running mate of Dilma Rousseff, the governing Workers' Party's (PT) likely presidential candidate.
The likelihood he will stay at the central bank until the end of the current government was reinforced on Friday by comments from President Luiz Inacio Lula da Silva at an event he attended with Meirelles in Goiania, the capital of Goias.
"I said 'Meirelles, stay in the government until the end, complete your mandate with me until the end'," Lula said.
"If you are going to be a candidate or not that is the decision of the PMDB. I am not going to comment on whether or not you are going to be a vice-president (candidate)," he added.
At a separate event in Rio de Janeiro, Planning Minister Paulo Bernardo said Meirelles had told him he wouldn't run for the governor position nor for a seat in the Senate.
Meirelles could still leave office by April 2 to run for the Senate or vice-presidency but those possibilities are increasingly unlikely, analysts say.
"In principle, (his comments) signal that he will stay on in the post and keep market confidence and stability in this election year," said Ines Filipa, Brazil economist at Britain's ICAP, the world's biggest interdealer broker.
"It could be more advantageous for him to continue (at the central bank) and to win a ministry post if the PT wins," she added.
FUTURE FINANCE MINISTER?
Meirelles' comments come against a backdrop of increased market volatility in recent weeks as investors face fears of another global economic slump due to debt problems in the euro zone and over rising inflation pressures in Brazil.
Analysts agreed Meirelles would be unlikely to leave office to run for the Senate, adding that he wanted a bigger role.
He is believed to be keen on running as vice-presidential candidate for the ruling coalition but the final decision lies with the centrist PMDB party, which is seen as unlikely to choose Meirelles, who only joined the party in September.
The PMDB wants a vice-presidential candidate who would be more likely to represent and lobby for the party's interests in a possible coalition government, a party source told Reuters.
"The PMDB is more likely to put up a name that is more in tune with the internal issues of the party," Bernardo Wjuniski, an analyst at Tendencias in Sao Paulo said.
"Our evaluation is that there is a bigger probability of him staying, betting on a Dilma victory to assume a post at a ministry," he said, adding that Meirelles could be eyeing the Finance Ministry.
Meirelles might have a better chance of getting on the presidential ticket if Rousseff continues a recent rise in opinion polls, some analysts say, because it would give Lula more bargaining power with the PMDB.
Support for Lula's chief of staff jumped to 28 percent from 22 percent in November, narrowing the gap with likely PSDB opposition party candidate Jose Serra to just five points.
Lula is the most popular president in Brazil's recent history but analysts still have doubts over whether he will be able to transfer his votes to the less charismatic Rousseff.
"If Dilma starts to rise very quickly in the polls or keep the rhythm at which she has been rising in the last weeks, eventually this boosts the chances of Lula having more say in the choice of the vice-president," Alexandre Lintz, chief strategist at BNP Paribas in Sao Paulo said.
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