Dark Clouds Gather Over Glapinski Again, Dabrowski Floats Idea Of Considering QT

The proposal to put NBP Governor Adam Glapinski on trial has gained traction over the weekend, despite earlier signs of a detente in the central bank's relations with the new government. Against the backdrop of intensifying tensions with the former ruling party and its political appointees, Prime Minister Donald Tusk said that he considers last week's verdict of the Constitutional Tribunal non-binding, adding that his administration will explore alternative ways to hold Glapinski accountable.

• Money.pl ran an article suggesting that the Tribunal's verdict may have inadvertently lowered the threshold for prosecuting Glapinski. The top court struck down a clause requiring an absolute majority of votes in the lower house of parliament (231) to refer the Governor to the Tribunal of State and advised to raise the threshold to a 3/5 (276) supermajority. However, until parliament amends the bill in line with the court ruling, the threshold is regulated by the general rules outlined in the constitution, which stipulate that parliament adopts resolutions by simple majority of votes.
• The Constitutional Tribunal will hold another hearing on the matter on Thursday at 10:00GMT/11:00CET. Last week's ruling was brought to the court by a group of main opposition party (PiS) MPs, while this week's case was brought by a group of PiS Senators. Note that the government has an ambivalent approach to the verdicts of the Constitutional Tribunal, questioning the legality of the appointment of some of its judges by the PiS administration. Meanwhile, according to the aforementioned Money.pl piece, the coalition could establish a parliamentary committee to conduct a preliminary probe into Glapinski, without yet referring him to the Tribunal of State.
• Renewed turmoil around Governor Glapinski provides another perspective from which to interpret an interview with MPC's Ireneusz Dabrowski, who floated the idea of selling part of the NBP's holdings of bonds purchased amidst the COVID-19 pandemic. These comments came as a surprise, given Dabrowski's earlier policy bias (he was deemed the most dovish policymaker in PAP newswire's September consensus poll and is considered to be a close ally of Glapinski). His proposal drew criticism from PiS-appointed state development fund chief Pawel Borys, who warned that it would disrupt the local bond market.
• Santander have interpreted Dabrowski's comments as a warning shot against the Tusk Cabinet to discourage any action against the Governor, who had earlier said that an "irresponsible" central bank could unload its POLGB holdings. Credit Agricole write that Dabrowski's comments are an upside risk to their rate scenario (two 25bp cuts this year) alongside putting Glapinski on trial. PKO describe Dabroski's comments as surprising, even from a purely economic point of view, noting that the inflationary impulse resulting from the expiry of anti-inflationary measures would not be driven by increased demand. Finally, mBank played down the odds of the NBP launching QT, noting that the BoE is practically the only central bank unloading its bond holdings due to their longer average duration.