Direct inflation targeting in Central Europe

This paper discusses perceived benefits and disadvantages of direct inflati on targeting for economies in transition in Central Europe. it examines the experience of net inflation targeting in the Czech Republic and of CPI for ecast targeting regimes in Poland, providing specific suggestions for enhan cing transparency of monetary policy. Inflation targeting is compared with exchange-rate pegging and is viewed as a superior solution for facilitating the monetary convergence of central European EU candidates to the inflatio n level prevailing in the eurozone. Other benefits of inflation targeting f or central banks in transition economies are described as well. Jouunal of Economic Literature, Classification Numbers: E31, E52, P33.