The Monetary Policy Board, the National Bank of Poland’s (NBP’s) monetary policy body, is reportedly split over the government’s attempt to bring  Governor Adam Glapinski to trial before the State Tribunal, Polish media reported on March 11.

The board’s most recent meeting, which took place on March 5-6, was reportedly stormy, as rate-setters split along political lines over a vote on a resolution in support of Glapinski in the context of his potential summoning before the State Tribunal.

The Polish government was reported in February to seek Glapinski’s suspension or even removal from his post after putting him first through a hearing before the State Tribunal, a special court for the country’s top officials.

The government reportedly targets Glapinski for allegedly getting the NBP involved directly in the campaign of the then-ruling Law and Justice (PiS) party before the October parliamentary election. 

The central bank unexpectedly slashed interest rates in September and October by as much as 100bp to the current level of 5.75% in a move that analysts said ran very much counter to market sentiment at the time. It  has not cut rates since.

The government also claims that the NBP misled the public by saying in August 2023 that it would contribute PLN6bn (€1.38bn) to the state’s budget from the bank's profit. However, the NBP’s result is currently expected to be a loss of over PLN20bn for 2023.

“Prime Minister Donald Tusk has given the green light to attempts to place the governor in front of a special tribunal, which could suspend him and eventually force him out of his job, according to people familiar with the premier’s thinking,” Bloomberg reported in mid-February.

At the March meeting of the rate-setting body, only six members appointed by the PiS government supported the resolution objecting to the plan to suspend Glapinski. Three other members – appointed by then opposition-controlled Senate – left the meeting room, according to money.pl, a business and financial news website.

“Removing the president would violate the independence of the central bank, and as a result, it would have negative consequences for the Poles and the Polish economy,” the resolution reportedly read.

The rate-setters also clashed over an interview one of the Senate-appointed board members gave to one of the broadcasters in February.

In the interview, Przemyslaw Litwiniuk discussed Glapinski’s controversial appointments of some of the former members of the Monetary Policy Board – allegedly those who would vote in line with Glapinski at the board’s policy meetings – to be advisors to the governor, money.pl reported.

“If we look at the number of advisors employed at the NBP who were previously members of the Monetary Policy Council … it looks like hard work to gain [Glapinski’s] trust in exchange for loyal voting,” Litwiniuk was quoted in a report by TVN24.

Earlier reports said that the Polish government was ready to accept the market turmoil that the suspension or dismissal of Glapinski could potentially cause in financial markets.

Meanwhile, Glapinski has praised the NBP’s actions to quell the inflation rate after the CPI eased growth to just 3.9% year on year in February, an estimate from the statistical office GUS showed late last month.

The inflation rate was as high as 18.4% y/y in February 2023.

Inflation is expected to rise again, however, in the wake of a government decision, announced on March 12, that the VAT rate on basic foods will return to 5% on April 1 after more than two years at zero, which was an anti-inflation measure implemented by the previous government.

"From April, grocery prices will rise, pushing annual CPI inflation up by around 1pp from around 2.5% in March to 3.5% in April," BNP Paribas Bank Polska said on X.