UPDATE 2-Palocci tapped as chief of staff in Brazil gov’t

* Wall Street favorite to take cabinet chief job

* Palocci ‘will have strong influence’, source says
(Updates with confirmation)

BRASILIA, Nov 25 (BestGrowthStock) – Wall Street favorite Antonio
Palocci is to become the chief of staff in the incoming
government of Brazilian President-elect Dilma Rousseff, an
influential position that is likely to please financial
markets.

“It’s Palocci as chief of staff,” a source in Rousseff’s
transition team told Reuters.

The decision came after a lengthy meeting between Palocci
and Rousseff at her official residence in Brasilia earlier on
Thursday.

Palocci, a former finance minister known for fiscal
discipline and a close advisor to Rousseff during her election
campaign, is expected to have a strong influence Rousseff’s
administration, said a second source close to the incoming
government.

Rousseff formally announced her economic team on Wednesday,
keeping Finance Minister Guido Mantega in his job and
nominating Alexandre Tombini, a well-regarded technocrat, to
head the central bank.

Palocci, who was finance minister from 2003 to 2006, was
the main author of the austere budget policies that marked the
first term of outgoing President Luiz Inacio Lula da Silva.

The fiscal rigor of that period helped win over skeptical
Wall Street investors, making possible Brazil’s current
economic boom and turning Palocci into a symbol of the
country’s responsible economic management after decades of
inflation and constant crisis.

Rousseff’s economic team has surprised investors by
promising deep budget cuts. Mantega told Reuters on Wednesday
that Rousseff had requested a “heavy hand” on budget spending
and would implement at least 20 billion reais ($11.7 billion)
of cuts. [ID:nN24293981]

“That’s mostly (Rousseff) talking, but yes, Palocci played
a role,” one of the sources said.
(Reporting by Carmen Munari and Brian Winter; Writing by
Raymond Colitt.)

UPDATE 2-Palocci tapped as chief of staff in Brazil gov’t