Inflation Targeting in The Czech Republic: History and Current Situation Under The Circumstances of The Economic Crisis

Diploma thesis analyzes the inflation targeting regime. The theoretical part describes the basic mechanism of the regime, which consists of setting the inflation targets and the exceptions when the inflation rate may deviate from the targeted zone. Further part describes production of conditional and unconditional forecasts and operational steering of central bank interest rates. In the theoretical part are also summarized the advantages and disadvantages of the regime. The empirical part of this thesis consists in application of the theoretical findings to the practical experiences of CNB. It describes the process of setting the inflation targets and forecasting procedure of CNB. Final part of the thesis summarizes the successes and failures of practical application of the regime in the Czech Republic