Open letter from members of the National Bank of Poland Board to the Sejm Speaker
Board members of the National Bank of Poland (NBP) sent a public letter to the Chairman of the Sejm, defending President Adam Glapiński and outlining the board’s view that the bank’s actions between 2020 and 2023 served the economic interests of the Republic of Poland. They urged the Chairman to share the correspondence with all members of the National Assembly.
In the letter to Szymon Hołownia, the signatories asserted that the NBP and its president acted in alignment with the law and with the best economic understanding available at the time, emphasizing that their measures were aimed at safeguarding Poland’s economic stability.
With inflation rising in the post-pandemic period and amid the broader disruptions caused by Russia’s invasion of Ukraine, the signatories noted that Poland was not alone in facing price pressures. They observed that inflation was a global issue, with a greater impact in Central and Eastern Europe, and that the Monetary Policy Council responded by adjusting interest rates to curb prices.
The letter details how the NBP’s benchmark rate was increased from October 2021 to September 2022, marking a historic rise of 6.65 percentage points. It notes that from September 2022 to August 2023 the rate remained at levels consistent with the central bank’s inflation target, while being higher than those in the euro area and the United States. By July 2022, the NBP rate stood at 6.50 percent even as the ECB’s deposit rate was negative, illustrating the bank’s proactive stance amid international policy movements.
The authors argue that the higher policy rate contributed to a rapid decline in inflation, from 18.4 percent in February to 6.6 percent in October, a trend they expect to continue though with potential month-to-month variations. They attribute the inflation trajectory to the combination of the pandemic shock and geopolitical developments, and emphasize that the policy path followed was designed to protect price stability over the medium term.
Regarding bond purchases during the COVID-19 crisis, the letter explains that the NBP engaged in transactions aimed at preventing a sharp decline in GDP, a step taken from March 2020 through November 2021. The authors contend that these operations were constitutional, within the NBP’s exclusive mandate to conduct monetary policy, and they dispute criticisms based on Article 220(2) of the Polish Constitution. The signatories argue that Article 220(2) does not ban open-market operations, and they remind readers that Article 48, paragraph 2 of the National Bank of Poland Act supports the NBP’s ability to buy and sell government debt securities.
The letter stresses that such actions followed the practices of other major central banks and were employed by institutions like the US Federal Reserve, the ECB, and the Bank of England. It cites that around 40 central banks engaged in asset purchases during the pandemic and that Poland’s program, relative to GDP, was modest compared with larger economies. The purchases occurred on the secondary market through open auctions with banks, with clear communications about operation details and settlement dates. Offers were judged by market quotes, and less favorable bids were rejected to protect affordability for taxpayers.
In June 2023, the IMF affirmed that the NBP’s rate increases were appropriate and effective, noting that policy had tightened in a timely manner and that the asset purchases supported liquidity and policy transmission. The IMF analysis also indicated that the NBP’s actions did not violate EU treaty provisions and that EU overseers did not object to the program. The authors argue that attempts to frame the NBP’s independence as compromised were unfounded, suggesting political calculations behind any move to dismiss the current president.
The signatories contend that the NBP’s actions between 2020 and 2023 helped protect the country from economic collapse and contributed to dampening inflation caused by pandemic and geopolitical pressures. They urge the Speaker to forward the letter to all members of the National Assembly and note that, due to the importance of the issue, the letter is presented as an open document and will be made public within 24 hours of its transmission.
The letter is signed by Adam Lipiński, Paweł Szałamacha, Piotr Pogonowski, Marta Gajęcka, Marta Kightley, and Rafał Sura. (Source: wPolityce)
mly/NBP
Source: wPolityce