Pressure on Polish central bank may destabilise markets

BUDAPEST: Political pressure on Poland’s central bank could destabilise financial markets and hinder its ability to achieve price stability, Governor Adam Glapinski told a central banking conference in Budapest on Friday.

In October, a parliamentary committee which had been probing Glapinski behind closed doors recommended that he be brought before the state tribunal to answer accusations of constitutional violations in office, which Glapinski denies.

The National Bank of Poland (NBP) says the allegations against the governor are devoid of substantive basis and are political in nature. Before taking power, Polish Prime Minister Donald Tusk, who faces the prospect of a closely fought election next year, had promised to depose Glapinski, calling the governor appointed under a previous right-wing government “illegal”.

The NBP held its main interest rate at 3.75 percent last week, saying it expected inflation to remain within its target range for this year, although its prospects are uncertain.

However, Glapinski has warned that the bank may decide to tighten monetary policy next year amid a clear risk of inflation accelerating further in the coming months.