Czech Republic
ISBN: 9781484305324
Platform/Publisher: Ebook Central / INTERNATIONAL MONETARY FUND
Digital rights: Users: Unlimited; Printing: Limited; Download: 7 Days at a Time
Subjects: Business/ Management; Economics;

This Selected Issues paper analyzes the Czech Republic's monetary policy after removal of the exchange rate floor. The koruna-euro exchange rate floor, which had been in place for more than three years, was eliminated in the beginning of the second quarter of 2017. Exit poses a number of challenging policy questions, including on the optimal monetary policy in its aftermath. The simulations indicate that a monetary policy response that is ex-post too loose is likely to be less costly than a monetary policy response that is ex-post too tight. This suggests that a gradual approach to interest rate increases is advisable.


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