How responsible is the Polish central bank? - Commerzbank

The zloty weakened against the euro and against other CE3 peers yesterday after Poland's controversial Constitutional Court ruled that NBP governor Adam Glapinski could not be brought before a parliamentary committee, nor State Tribunal, nor assessed in a report by such bodies because that would go against constitutional guarantees of central bank independence. Indeed, this is the language, which the previous ruling party (PiS) has used, from the very beginning, to frame this particular dispute Commerzbank's FX Analyst Tatha Ghose notes.

Zloty weakens against the Euro

"We do not think that the argument makes sense or that parliament will take the Constitutional Court's ruling as binding. Poland's Constitutional Court, itself, has been tainted since the rule of law dispute days (versus the EU), and lacks legitimacy. Other principal courts are also dominated by right wing PiS affiliates. Accusations by both sides are purely ideological and not based on good faith."

"On balance, it indeed appears that Glapinski's 'emergency' rate cuts - just before the elections - but steadfast refusal to cut rates further once an opponent political party had taken over government, were politically motivated. After not upholding its own constitutional responsibility to remain apolitical, NBP cannot now simply appeal to 'CB independence'."

"The KO government will most likely proceed with the planned Sejm procedures regardless of the latest ruling, and push for an outcome where Glapinski is suspended. Glapinski, in turn, will use the ruling to defy interrogation. All in all, this drama will continue in parliament for the next year without clear resolution. And chances are that monetary policy will remain wholly political and 'frozen' through this timeframe."