Polish Central Bank Doubles Down On Defence Of Its Governor

The National Bank of Poland's management board held a press conference yesterday, which - in line with expectations - was devoted to the risk of Governor Glapinski being put on trial for his alleged breaches of the law. The presser was attended by five out of eight board members, with First Deputy Governor Marta Kightley assuming the leading role. The Governor as well as Pawel Mucha and Marta Gajecka were absent.

• Kightley reaffirmed the central bank's familiar line of defence, noting that the NBP is pursuing its inflation mandate and "clearly communicating" that inflation is on track to reach the target in 2025. She said that the sell-side nature of this inflation episode and the "turbulence" that affected the Polish economy in the past few years justified the NBP's gradualist approach.
• The latest press conference was part of the NBP's broader legal and media counteroffensive launched in response to suggestions that the incoming government could press charges against the Governor. Earlier on Monday, the board published a letter to Sejm Speaker signed by all members other than Glapinski and Mucha, while ahead of the weekend the NBP released a similar letter signed by all MPC members other than Glapinski and the three Senate nominees (Tyrowicz, Kotecki, Litwiniuk).
• This comes ahead of this week's monetary policy meeting, the last one this year, at which the MPC is widely expected to keep interest rates unchanged. Senior representatives of the pro-EU parliamentary majority have walked back on their earlier pledges to put Glapinski on trial and their messaging has recently turned more ambiguous, with PM candidate Donald Tusk pledging to protect the stability of key institutions.
• Yesterday's comments from ECB President Christine Lagarde, who advised that if the Sejm took action against Glapinski, he could "refer such resolution to the Court of Justice of the European Union". Lagarde's comments highlights just some of the legal and political barriers to prosecuting Glapinski, which - together with the notorious ineffectiveness of the State Tribunal - may outweigh pressure from the electorate of the pro-EU coalition to hold officials nominated by the outgoing administration to account.