Polish central bank chief seeks truce with Donald Tusk over ‘idiotic’ accusations

The head of Poland’s central bank will write to Prime Minister Donald Tusk in a bid to end an increasingly bitter feud that he warns is hurting the country’s international image.

Adam Glapiński, who was appointed by the rightwing Law and Justice (PiS) party, told the Financial Times he had “nothing to hide” and was “of course” ready to defend his actions before a state tribunal if his offer of a truce was rejected.

Poland’s new coalition government led by Tusk has claimed that Glapiński abused his powers to try to help PiS win last October’s election. The 73-year-old took up a second six-year term at the central bank in 2022 and considers PiS leader Jarosław Kaczyński a friend.

Tusk’s attack on Glapiński is part of the prime minister’s broader drive to oust PiS loyalists from the state apparatus. Poland’s constitutional court, which is entirely filled with PiS-appointed judges, ruled in January that Tusk’s coalition lawmakers could not make the central bank governor appear before a tribunal.

But Tusk has said the ruling will not stop his coalition from pursuing the central banker. Tusk’s lawmakers recently drew up charges against Glapiński relating to alleged wrongdoings including the unlawful buying of government bonds and misleading accounting. Glapiński denies all the charges.

Poland’s central bank also cut interest rates by 0.75 percentage points just one month before the October elections when inflation was still in double digits, a move the Tusk coalition has claimed was politically motivated.

“I understand that, for Tusk, the easiest way to manage the campaign was to accuse the government and the central bank of causing inflation, because it was so high,” Glapiński said during a three-hour interview at his Warsaw headquarters. “But we are now after the elections. It is time to stop. We have common problems.”

In response to claims that he was politically biased, Glapiński, who is also a professor at the Warsaw School of Economics, said: “I don’t believe that someone in Poland could accuse the central bank of false monetary policy against inflation or purchases of bonds.” He added that some allegations were “idiotic” and they “have changed many times — there is nothing”.

“I hope Mr Tusk will change his mind. He is not an economist. Inflation is now coming down to target,” he added. “I will send a letter to Mr Tusk to say that there are so many misunderstandings and so many bad words, which were from both sides, that I think it is time to meet and talk.”

The stand-off between Tusk and Glapiński has also fuelled divisions within the central bank, with some senior policymakers turning on its governor. European Central Bank president Christine Lagarde has told the central banker he can appeal to the European Court of Justice to decide if any move to prosecute — and therefore suspend — him is legal.

Glapiński said a state tribunal would be “very bad for Poland”, adding he was “not ready” to resign because that could be viewed as an admission of guilt.

Defending the decision to cut rates in September, Glapiński pointed out that Hungary had cut rates even earlier and that Polish inflation had since fallen to 2.8 per cent in February — within its target range of 1.5 per cent to 3.5 per cent. He said inflation had been falling faster than forecast and there was a feeling among members of the bank’s monetary policy council that its rate cut “should have been announced one or two months before”.

He added that the bank would have kept cutting rates further this year if the new government had not promised to remove energy and food subsidies, which he warned could push inflation back up to 8 per cent — although some economists think the impact would be much smaller. Earlier in March it left the benchmark rate unchanged for a fifth month, having made an additional cut of 0.25 percentage points in October.

Glapiński denied that the central bank had bought bonds directly from the government, which would be illegal, and said it had only done so in the secondary market through publicly announced auctions, as many other central banks had done during the pandemic.

“This was done for monetary policy purposes only,” he said. “But we also avoided massive bankruptcy in the economy.”

A third allegation — recently raised by Paweł Mucha, a member of the Polish central bank’s management board — concerns Glapiński’s projection that the central bank would make a sizeable profit in 2023. It instead made a loss, but the former PiS government had factored a big dividend from the central bank into its pre-election budget plans.

Three members of the monetary policy council last week went public with a letter calling for Glapiński to meet them to discuss the central bank’s 2023 financial statements.

Glapiński said his forecast of a profit last August was “informal” guidance to the finance ministry and “99 per cent uncertain”. He said the situation turned “quite different” later in the year, when it became clear there would be a loss mainly due to currency movements.

While the Polish central banker has in the past been outspoken in his criticism of the euro, he told the FT that Poland might be ready to join the single currency in about a decade, once its gross domestic product per capita had caught up with richer EU countries.

“The euro is good for the most developed and financially stable countries of Europe,” he said, even if it “did not fit so well” for countries such as Italy after the 2008 financial crisis. “The only problem I could have is if Germany wanted Poland to join the euro too quickly,” he said, before adding: “I don’t see that problem now.”

Despite his own run-ins, Glapiński said leaders of the ECB were more “politically involved” than him, pointing to a recent warning from Lagarde about the risks for Europe if Donald Trump became US president. “I have some politically involved opinions but I exchange them with my wife after I get home,” he said.