MONETARY POLICY OF THE CZECH NATIONAL BANK DURING THE COVID-19 PANDEMIC AND ITS IMPACT ON INFLATION DEVELOPMENTS AND ECONOMIC STABILITY OF THE CZECH REPUBLIC

This bachelor thesis examines the monetary policy of the Czech National Bank (CNB) during the COVID-19 pandemic and its impact on price developments in the Czech economy. The aim of the thesis is to assess which monetary policy instruments were applied during this period, how the economy responded to them, and what influence they had on inflation and macroeconomic stability. The theoretical part introduces the CNB as an institution, defines key concepts related to inflation and monetary policy, and presents relevant economic theories – namely monetarism, New Keynesianism, and the rational expectations school. The empirical part approximates inflation using the consumer price index (CPI), which reflects changes in the general price level. A multiple linear regression model is used to examine the relationship between the key monetary policy tools – the repo rate and the money supply (M3) – and the development of inflation between 2018 and 2024. The results indicate that the repo rate had a statistically significant impact on inflation, while the influence of the money supply M3 was less pronounced. The findings suggest that CNB’s monetary policy played an important stabilizing role during the pandemic period, though its effectiveness was partially constrained by external shocks and structural changes in household behaviour. The thesis also compares the CNB’s approach with those of selected Central European countries and evaluates the effectiveness of various measures in a broader international context.