Challenges to Monetary Policy in the Czech Republic

This paper uses the Global Integrated Monetary and Fiscal Model (GIMF), a New Keynesian open-economy general equilibrium model suitable for an integrated evaluation of monetary and fiscal policies, to analyze monetary policy challenges facing the Czech Republic. In the context of the recent rising inflation pressures, we analyze how the authorities'' fiscal reform package and the planned reduction in the inflation target in 2010 would weigh on the conduct of monetary policy.Inflation targeting;inflation, monetary policy, inflation target, monetary fund, national bank, reduction in inflation, nominal interest rate, central bank, price stability, real interest rate, monetary economics, monetary policy implications, rising inflation, moderate inflation, inflation targeting regime, inflation rate, monetary policy reaction function, inflationary pressures, monetary policy rule, monetary authorities, real interest rates, real wages, foreign exchange, rate of inflation