External review of the CNB’s monetary policy analytical and modelling framework

The turbulent past five years – especially the Covid crisis and the subsequent energy crisis – have led many inflation-targeting central banks to consider making changes to the conduct of monetary policy. Like a number of other central banks, the CNB decided to conduct an external review of its monetary policy analytical and modelling framework. This was the first such review in its history.

Three independent reviews commissioned by the Bank Board in January 2024 form the centrepiece of the review. The CNB’s analytical and modelling framework was reviewed by a team led by Professor Martin Mandel and Associate Professor Karel Brůna from the Prague University of Economics and Business (VŠE), Professor John Muellbauer from the University of Oxford, and Roman Šustek from Queen Mary University of London.

The Bank Board decided on 31 October 2024 to publish all three evaluations in full, along with resources prepared at the CNB in connection with the external review – the results of a questionnaire summarising the approaches of other central banks: The Role of Macroeconomic Forecasting Models in the Central Bank’s Forecasting Process; and a general description of the modelling framework: CNB Forecasting and Policy Analysis System: Forecasting Tools.

The next phase will involve conducting an internal assessment of relevant documents and proposing main steps to ensure the implementation of changes.