The Inflation Targeting Regime in Ukraine and Czech Republic: a Comparative Analysis

The main purpose of this article is to determine the impact of the inflation targeting regime on the inflation rates in Ukraine and the Czech Republic, to identify the advantages and disadvantages of its use, to study the evolution and dynamics of inflationary processes in Ukraine and the Czech Republic, as well as the nature and causes of inflation in Ukraine and the Czech Republic. A separate goal is to analyze the conditions and features of the Czech Republic's experience with the introduction of inflation targeting and the formation of recommendations of successful measures to achieve inflation goals for Ukraine. In the paper, the authors examined the practice of applying the inflation targeting regime in Ukraine and the Czech Republic in order to identify the positive and negative consequences of the implementation of this monetary policy regime. A review of publications has shown varying attitudes towards the inflation targeting regime. The paper describes the chronology of inflationary processes in the researched countries, the dynamics of the consumer price index, the socio-economic consequences and causes of inflation. Attention is focused on the need for state regulation of inflationary processes. The effectiveness of the anti-inflationary policy was determined. In line with the findings of the study, the prospects for the implementation of an effective monetary anti-inflationary policy aimed at effective regulation of inflationary processes are outlined. The authors conclude that the study of the National Bank of Ukraine's (NBU) monetary policy is important because it affects inflation, the exchange rate, and economic growth. Economic agents always adjust financial risks, keeping in mind that historically inflation has been one of the most acute problems for Ukraine2, which has an uneven constant development. This study is aimed at determining the nature and causes of modern inflation in Ukraine and in Czech Republic and the possibility of its regulation by monetary methods. Differences in the dynamics of inflation processes in the presented countries indicate that inflation in each country has specific features related to pricing, purchasing power, money circulation, anti-inflationary and countercyclical policies. However, unevenness and cyclical development of inflation is typical for the studied countries. The results of this study are of interest to the Ministry of Economy of Ukraine, the National Bank of Ukraine, as well as the Committee on Ukraine's Integration into the European Union, whereas the processes of European integration contribute to reducing inflation in the future. The authors conclude that in the process of creating effective economic policy, it is necessary to use the experience of other countries that have achieved stable, multi-year success in this process. This study highlights the discussion about inflation targeting experience in the transition economies of Ukraine and Czech Republic. The authors emphasize that circumstances that led to the transition from exchange rate pegging to inflation targeting have made significant progress in reducing inflation. The authors discovered that the focus of inflation-targeting by central banks should be on the medium-term horizon in order to ensure inflation reduction as well as inflation level appropriate for price stability.