The Czech Republic's inflation targeting experience

This chapter discusses the experience of the Czech Republic with inflation targeting (IT). The Czech Republic was the first transition economy to adopt IT. The author argues that IT was adopted only after other monetary policy regimes had failed. An important feature of the Czech regime is the need to build an exit strategy into the policy framework, given the country's expected entry into the euro zone, although no date has yet been announced. The problem of exiting from a monetary policy regime has so far been faced by countries with fixed exchange‐rate regimes (including currency boards), rather than IT.