Frontiers of Monetary Policymaking : Adding the Exchange Rate as a Tool to Combat Deflationary Risks in the Czech Republic

Author/Editor:

Ali Alichi ; Jaromir Benes ; Joshua Felman ; Irene Feng ; Charles Freedman ; Douglas Laxton ; Evan C Tanner ; David Vavra ; Hou Wang

Publication Date:

April 1, 2015

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper first describes how the Czech National Bank (CNB) moved gradually from a fixed exchange rate regime to the frontiers of Inflation-Forecast Targeting. It then focuses on the CNB’s recent experience in adding the exchange rate as a complementary monetary policy tool to stimulate the economy and combat the risks of deflation when the policy interest rate is at the zero lower bound. It assesses the theoretical basis of such a policy, the communications approach used by the CNB when announcing the new framework, and the effects thus far on inflation and output.

Series:

Working Paper No. 15/74

Subject:

English

Publication Date:

April 1, 2015

ISBN/ISSN:

9781475532371/1018-5941

Stock No:

WPIEA2015074

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

44

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