Evaluation of the Fulfilment of the CNB's Inflation Targets

The introductory paper defines three stages of Czech inflation targeting and defines possible factors behind inflation deviations from inflation targets in 1998-2007. The paper also summarises the findings of analyses by CNB experts, which are presented in further chapters of the volume. According to these findings, deviations from targets cannot be explained by one factor alone. During various stages of inflation targeting, individual factors were of varying importance. Anti-inflationary shocks were the most frequent reason for deviations. Another significant reason – especially in the initial and advanced targeting stages – was the prognostic system. The decision making process for interest rates only contributed to undershot targets in the initial stage, during which it was necessary to build up the credibility of the new monetary policy strategy.