Thirteen domestic and three foreign analysts sent in their contributions to the September survey of financial market inflation expectations. The results reveal that the average annual inflation forecast changed only slightly, rising modestly at the one-year horizon but falling to the same extent at the three-year horizon. The estimate for Czech economic growth this year is unchanged, but the outlook for next year is slightly more pessimistic. All the analysts in the September survey were correctly expecting the CNB Bank Board to cut key interest rates by 25 basis points at the September meeting. (pdf, 1 MB)
In this paper, the authors investigate whether inflation-targeting monetary policy affects households' incentives to build resilience against energy price shocks. They modify a stylized heterogeneous agent New Keynesian model with search and matching frictions in the labor market and nominal asset holdings to include energy in consumption and production, and energy conservation capital, so that energy price fluctuations affect both the supply and demand side of the economy. In such a framework, the authors study the responses of energy conservation to monetary policy, rising energy prices, and their interaction.
The September issue of Global Economic Outlook presents a regular overview of recent and expected developments in selected territories. The analytical section of this issue focuses on green transformation, which will require significant investments in new technologies and is, to some extent, conditional on the availability of “critical materials”, which are an essential part of the clean energy transition.
The Bank of Israel has faced several challenges in recent years – it responded to a fall in economic activity caused by the covid pandemic, it resisted the inflationary wave, and since October last year, it has dealt with economic impact of war with Hamas. Petr Kaštánek from the Monetary Department describes measures taken by the central bank in response to these events, as well as long-term evolution of monetary policy framework in Israel.
In the past two years, Europe has been hit by an inflationary tsunami. Natálie Dvořáková and Tomáš Šestořád took a closer look at the origins of inflation in the Visegrád Group countries (Czechia, Hungary, Poland, and Slovakia). In the paper, they show that the external environment can only partially explain the high-inflation episode. Domestic supply and demand factors played a significant role, with their varying intensity across countries accounting for the differences in price increases.
The majority of the central banks under review, including the ECB, cut their interest rates, and the US Fed announced they would soon be reduced. Spotlight is focused on evolution of monetary policy in Israel, including the reaction of the local central bank to the war with Hamas since last October. In Selected speech, New York Fed President looks at the natural rate of interest, so-called r*, and discusses whether it has gone up in recent years based on available model estimates. (pdf, 698 kB)