January Copom Meeting to Have Two Vacant Seats Out of Nine, Sources Say

• Why the Copom Meeting Will Have Unprecedented Vacancies
• The Departing Directors and Replacement Timeline
• Political Hurdles in the Nomination Process
• Market Implications of the Vacancies
• Potential Candidates for the Vacant Positions
• Historical Context and Precedents
• Legislative Calendar Challenges
• Political Tensions Complicating Nominations
• What This Means for Investors
• Frequently Asked Questions

Brazil's Central Bank Monetary Policy Committee (Copom) is set to hold its January meeting with an unprecedented two vacant seats out of nine, as President Lula delays new nominations amid political tensions. Here's what you need to know about this historic situation and its potential market impacts.

Why the Copom Meeting Will Have Unprecedented Vacancies

President Luiz Inácio Lula da Silva is expected to send his next two nominations for the Central Bank's board to the Senate only next year, according to three sources familiar with the matter. This delay means the crucial January monetary policy meeting will proceed with just seven of nine members present - a first in Copom's history since its minutes began being published in 1998.

The Departing Directors and Replacement Timeline

The terms of the last two directors appointed by former President Jair Bolsonaro - Diogo Guillen (Economic Policy) and Renato Gomes (Financial System Organization) - expire at the end of December. While legally they could remain until their successors are sworn in, two sources expect them to step down when their terms end. Their responsibilities WOULD temporarily be absorbed by other Copom members, all Lula appointees.

Political Hurdles in the Nomination Process

The nominations face significant challenges in the Senate, where relations with the government remain strained. After presidential indication, candidates must undergo questioning in the Senate's Economic Affairs Committee before a full floor vote. Senate leaders confirm they haven't been approached about any Central Bank nominations yet.

Market Implications of the Vacancies

Financial markets are keenly watching whether the Central Bank will begin an anticipated rate-cutting cycle at the January 27-28 meeting or wait until March. With Brazil's benchmark Selic rate holding at 15% since June - its highest level in nearly two decades - and growing signs of economic slowdown, the vacancies add uncertainty to this critical decision.

Potential Candidates for the Vacant Positions

Sources suggest the government hasn't finalized its choices yet. One possibility is International Affairs director Paulo Picchetti moving to the more strategic Economic Policy directorship. Picchetti, close to Finance Minister Fernando Haddad, is considered an inflation specialist. For the Financial System Organization directorship, the government might nominate a career Central Bank official like cabinet chief Angelo Duarte, department head Carolina Boher, or executive secretary Rogério Lucca.

Historical Context and Precedents

Copom minutes reveal no previous meeting with two absences since records began in 1998. The Central Bank declined to comment on the situation, as did the Finance Ministry and Presidential Palace. This unprecedented scenario comes as the bank faces one of its most challenging policy decisions in recent years.

Legislative Calendar Challenges

The tight legislative calendar, ending December 22, compounds the nomination difficulties. Even if approved this year, new directors would only participate in Copom's second 2026 meeting on March 17-18. The Senate resumes work on February 2 after the holiday break.

Political Tensions Complicating Nominations

The nomination process faces additional hurdles after Lula's (still unformalized) choice of Jorge Messias for the Supreme Court angered Senate President Davi Alcolumbre, who supported another candidate. These tensions create a challenging environment for any Central Bank nominations requiring Senate approval.

What This Means for Investors

While the vacancies create uncertainty, market consensus expects rates to hold steady in December. Investors should watch for any signals about whether the reduced Copom might delay the anticipated rate-cutting cycle. The situation underscores the complex interplay between politics and monetary policy in Brazil.

Frequently Asked Questions

How many vacancies will there be in the January Copom meeting?

There will be two vacancies out of the usual nine-member committee, leaving seven members to make monetary policy decisions.

Why are these positions becoming vacant?

The terms of two directors appointed by former President Bolsonaro expire in December, and their replacements haven't been nominated and confirmed yet.

Could the outgoing directors stay until replacements are confirmed?

While legally possible, sources expect them to step down when their terms end in December, creating the temporary vacancies.

Has Copom ever operated with vacancies before?

Copom minutes since 1998 show no previous meetings with two absences, making this situation unprecedented.

How might this affect interest rate decisions?

The vacancies add uncertainty as markets watch for whether Copom will begin rate cuts in January or wait until March.