Poland's central bank warns EU ETS2 could raise 2028 inflation by 2 percentage points

The National Bank of Poland (NBP) presented its July inflation report, projecting average annual inflation of 2.9% in 2026, 2.7% in 2027 and 2.2% in 2028. The forecast does not include the impact of the European Union’s second emissions‑trading system (ETS2), which is set to start in 2028 and will cover sectors such as transport and building heating. NBP economist Jacek Kotłowski said that, if emission permits are priced at €59 per tonne, ETS2 could increase inflation in Poland by up to 2 percentage points – a direct effect of about 1.5‑1.6 pp and an indirect effect of 0.4‑0.5 pp through higher energy prices. This would push the 2028 inflation rate from the projected 2.2% to roughly 4.2%, exceeding the NBP’s target range of 2.5% ± 1 pp. The bank noted that ETS2 is not yet incorporated into its baseline scenario because national legislation is still pending and the exact permit price remains uncertain. The NBP also highlighted that recent energy‑price shocks from the Middle‑East conflict have a smaller impact than in 2022, and that current fuel price rises have limited effect on inflation.