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Understanding Inflation Expectations in the Czech Economy: Data, Drivers, and Policy Implications

Author

Listed:
  • František Brázdik

    (Czech National Bank)

  • Tatiana Keseliová

    (Czech National Bank)

  • Karel Musil

    (Prague University of Economics and Business)

  • Radek Šnobl

    (Czech National Bank)

  • FJan Šolc

    (Czech National Bank)

  • Stanislav Tvrz

    (Czech National Bank)

  • Jan Žáček

    (Bank of England)

Abstract

We investigate inflation expectations and their measures amid the 2022 surge in the Czech Republic. Using data and econometric analyses, we explore how inflation expectations are formed and how they may affect inflation developments. To capture the overall trend of inflation expectations in the Czech economy, we develop a Common Inflation Expectations index. Additionally, we extend the CNB’s g3+ core projection model by incorporating endogenous expectation premiums that reflect elevated inflation expectations. Utilizing the Common Inflation Expectations index and the modified model, we construct a simulation that provides policy-relevant outcomes when addressing high inflation.

Suggested Citation

  • František Brázdik & Tatiana Keseliová & Karel Musil & Radek Šnobl & FJan Šolc & Stanislav Tvrz & Jan Žáček, 2026. "Understanding Inflation Expectations in the Czech Economy: Data, Drivers, and Policy Implications," International Journal of Central Banking, International Journal of Central Banking, vol. 22(1), pages 145-192, January.
    • Handle: RePEc:ijc:ijcjou:y:2026:q:1:a:4
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