Poland Monitors Trump’s Fed Probe as It Mulls Dollar Bonds
(Bloomberg) — Poland is closely watching for any market fallout from US President Donald Trump’s investigation into the Federal Reserve as the investment-grade sovereign considers issuing debt in dollars later this year.
The east European country relies more heavily on euro bond markets for international financing but has nevertheless sold $21.5 billion in dollar-denominated notes since 2022, including $5.5 billion last year. Trump’s probe into the remodeling of the US central bank’s headquarters marks a dramatic escalation of his administration’s attacks on the Fed, raising new questions about the institution’s independence.
“We are taking a deep look,” Karol Czarnecki, the head of the finance ministry’s public debt department, told Bloomberg News. “We cannot exclude that the development of the situation will be adverse for issuers, but for the moment we’re not discounting a disaster.”
The tensions between the Trump administration and the Fed triggered weakening of the dollar and a rise in long-dated US yields earlier this week. The moves so far have been relatively small, though, with investors reassured by Chair Jerome Powell’s defense of the monetary authority’s independence and blowback from some Republican senators.
Trump has long pressed the Fed to cut rates quicker to boost the economy and ease government borrowing costs. The president is poised to pick Powell’s replacement when his term expires in May, which has fanned fears that a politically-allied central bank could lower interest rates too far and fuel inflationary pressures.
Issuance Rethink?
Czarnecki’s comments signal the feud is starting to weigh on dollar-denominated bond issuance decisions across the globe.
“While Poland is small, I’d expect every country is debating the future role of dollars in debt issuance and foreign reserves,” said Win Thin, Chief Economist at Bank of Nassau. “Recent developments suggest that role will decline in a structural manner.”
Poland, an emerging economy whose public debt pile is bigger than that of Malaysia, Turkey and Argentina, plans a slew of foreign-currency debt sales in the first months of the year as it front-loads planned 2026 sales of as much as €12 billion ($14 billion).
Besides issuing debt in euros, the sovereign’s options include Japanese yen and US dollars, with the Swiss franc also developing into an interesting proposition from a pricing and demand perspective, Czarnecki said. It sold €3.25 billion in 5- and 10-year notes last week.
Another euro-denominated transaction is unlikely until after the summer to allow the market to digest the supply, Czarnecki said during a regional markets forum in Vienna. Poland last sold bonds in yen in 2024 and it hasn’t tapped the Swiss franc market since 2015, according to data compiled by Bloomberg.
In the meantime, any transactions in dollar and yen will depend on the situation on the market, according to the finance ministry official.
“We are pretty much ready for both markets,” Czarnecki said. “We have a kind of optionality in case something wrong happens, to choose the market we want to enter.”
–With assistance from Agnieszka Barteczko.
(Udpdates with comment from an economist and additional context, starting in paragraph two.)
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