PiS view to NBP expanding funding roles don’t carry QE-style mandate

Plans by the current poll leader in Poland Law & Justice (PiS) to engage the central bank in funding the economy will not have a QE nature allowing central bank funds to pull down Treasury bond yields, a key economic policy leader of PiS has said.

“This is about putting central bank reserves into action to lend to commercial banks at nearly zero interest rates in order for those banks to lend further to firms for investments,” PiS MP Henryk Kowalczyk told reporters.

“The central bank would guard to ensure that commercial banks didn’t spend those funds on bond purchases,” Kowalczyk added.

A presentation by Kowalczyk earlier in the week on PiS’ financing views had compared potential NBP actions to the ECB’s LTRO program, saying that a program comparable to LTRO in terms of funds to GDP could marshall PLN 350 bln in Poland over six years. Party leader Jaroslaw Kaczynski had likewise referenced the LTRO program in a campaign rally in southern Poland on Monday.

Fellow PiS economic policy leader Pawel Szalamacha, in turn, has consistently phrased potential NBP actions as resembling the Bank of England’s ‘Funding for Lenging’ program. In an interview Thursday for the daily Rzeczpospolita, Szalamacha suggested that supports would be selectively targeted at hand-picked sectors and R&D leaders.

Asked straight out Thursday if PiS is pursuing the ECB or the BoA model, Kowalczyk said only “those are just models.”

PiS leads in voter support polls ahead of a Sunday national ballot.

fdu/ gty/ ami

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