UPDATE 3-Brazil central bank chief joins political party

* Central bank confirms Meirelles joins PMDB party

* Decision leaves door open for 2010 political bid

* Little market reaction seen to widely expected move (Updates with ceremony Wednesday, adds background)

BRASILIA, Sept 29 - Brazil's central bank chief Henrique Meirelles joined the centrist PMDB party on Tuesday, keeping the door open for him to run for political office in the country's October 2010 general elections.

Meirelles decided to join Brazil's largest political party after consulting with President Luiz Inacio Lula da Silva, a central bank spokesman said. The central bank chief will formalize his affiliation at a ceremony in Goias on Wednesday.

The affiliation with the PMDB, the largest party in Lula's ruling coalition, does not necessarily mean Meirelles will run for office in next year's election. But it is likely to fuel speculation he could seek the governorship of his home state of Goias or a Senate seat. [ID:nN2981020]

By law, Meirelles has to leave the central bank by April 2, 2010, if he wants to run for office in next year's vote. Analysts say his decision will hinge on opinion polls, Lula's support and the health of the Brazilian economy.

The announcement was widely expected and analysts did not see it having much impact on Brazil's financial markets on Wednesday. Brazil's stocks and currency markets were closed at the time of the announcement.

"The market already expected (this)," said Mauricio Molan, senior economist at Santander in Sao Paulo, adding that the news would have a neutral impact on markets.

"What is still a source of uncertainty is the name of the successor," he said.

WHAT NOW?

Should Meirelles step down next year to run for office, an interim central bank chief is most likely to come from within the bank as outsiders might be hesitant to take the job for just a few months, analysts said.

The most widely cited possible successor is Alexandre Tombini, currently director for norms at the central bank, who would likely provide continuity to Meirelles' policies.

Lula is set to finish his second term on Dec. 31, 2010, and incoming presidents in Brazil typically appoint new central bank chiefs.

Uncertainty over Meirelles' political future has added volatility to interest rate future markets in recent months, a trend that may continue while he weighs an election bid.

A political bid seemed likely only last month, when President Lula praised the central bank chief's work in a ribbon-cutting event in his hometown of Anapolis.

Since then, Meirelles said Lula had asked him to stay in his post through the end of the current administration's term and a senior government official said Meirelles was inclined to do just that.

There are worries the central bank chief's affiliation to a political party could influence his decisions on monetary policy, but analysts say his track record makes that unlikely.

Meirelles, Brazil's longest-serving central bank president, is widely recognized for having stabilized Latin America's largest economy by keeping inflation under control and for having navigated Brazil's economy through the worst global financial crisis in decades without much damage.