Poland: Murky QE – Rabobank

For the first time in its history, the National Bank of Poland has started purchasing government bonds, economists at Rabobank reports.

Key quotes

“Bloomberg reported that yesterday’s bond operation triggered more questions and speculation after the NBP bought PLN 30.6bn of notes. Traders contacted by Bloomberg said that such a substantial amount of bonds could not have been sold by commercial banks.”

“The lack of transparency is likely to create more questions and speculation that could undermine Poland’s opinion amongst foreign investors, who expect an equal playing field for all market participants.” 

“We remain of the view that QE as a monetary tool in its purest form of increasing the supply of money by purchasing bonds and other securities should not be seen as a major source of risk to the Polish zloty just yet.”

“What is a critical issue that may have a substantial impact on the zloty is that QE must not be used to consolidate power and to promote the model of the economy that favours those who are currently at the helm without consideration for the long-term outlook and structural changes that could lead to serious economic imbalances.”