phase, inflation needs to continue to fall to levels close to 2 % next year, which will be the best news for the economy. more than before, the new bank board is monitoring and discussing money flows in the economy, and above all loans to households, firms and the government. we must look at money. we conduct monetary policy. the term is derived from the word " money ", which we label as m1 and define as the quantity of money in the economy. we have added elements of monetarism to new keynesian economics, the predominant school of thought at the cnb so far. for illustration, broad money ( m3 ) has risen by 31 % since january 2020 ( pre - covid ). the price level has increased by 33 % in the same period. in order to significantly slow inflation, money growth must also be slowed substantially. our dsge model created according to the new keynesian theory ends with the threemonth pribor interest rate ( michl, 2019b ). on top of that, in our considerations, the bank board must discuss the evolution of longer client interest rates and take into account how the interest rate transmission mechanism works and how changes in shortterm rates will affect long - term rates. we attribute a greater role to credit in the economy and debt, which our model previously left out. deputy governor eva zamrazilova also spoke about this at the university of economics and business. deputy governor jan frait also discussed this topic in his lecture at the university in ostrava in 2 / 6 bis - central bankers'speeches 2023. credit market developments very well combine our two main objectives – price and financial stability. because of the transmission lag, the central bank should correctly stop raising rates before inflation peaks. the problem of this academically and practically correct approach is that people can see that inflation is still high and might think that the central bank is not determined to fight inflation because rates have stopped rising. so, i try to explain over and over again that the cnb's interest rates are already at a level that is dampening economic activity. we have the tightest monetary policy in more than twenty years and we want it to remain so for some time. the current data from money flow monitoring are as follows : the volume of new mortgages fell by 64 % year on year in january – april 2023. new koruna loans to firms fell by 54 % year on year in the same period. however,

policy announcement surprises on equity indexes of fifty countries. these studies find that, on average, a hypothetical 25 basis point rise in the federal funds rate is associated with a drop of about 1 percent in foreign equity indexes. equity indexes in countries with a less flexible exchange rate regime respond more to u. s. monetary policy surprises. has globalization affected the u. s. inflation process? other than through its influence on financial markets, globalization may also have affected the operation of monetary policy by changing the relative importance of the various factors that determine the domestic inflation rate. 3 as national markets become increasingly integrated and open, sellers of goods, services, and labor may face more competition and have less market power than in the past. in particular, prices and wages may depend on economic conditions abroad as well as on conditions in the local market. these linkages suggest that, at least in the short run, globalization and trade may affect the course of domestic inflation. international factors might affect domestic inflation through several related channels. first, the expansion of trade may cause domestic inflation to depend to a greater extent on the prices of imported goods – not only because imported goods enter the consumer basket or ( in the case of imported intermediate goods ) affect the costs of domestic production, but because competition with imports affects the pricing power of domestic producers. second, competitive pressures engendered by globalization could affect the inflation process by increasing productivity growth, thereby reducing costs, or by reducing markups. third, to the extent that some prices are set in internationally integrated markets, pressures on resource utilization in foreign economies could be relevant to domestic inflation. 4 some analysts might object to the proposition that globalization affects the inflation process at all on the grounds that the structural changes that globalization engenders can affect only the relative prices of goods and services ; in contrast, inflation – the rate of change of the overall price level – must ultimately be determined solely by monetary policy ( ball, 2006 ). certainly, monetary policy determines inflation in the long run, and the central bank must take responsibility for the inflation outcomes generated by its policies. for example, the opening of trade with emerging - market economies that have low labor costs may reduce the relative prices of imported manufactures, but if the long - run inflation objective of the central bank is held constant, then the ultimate effect of the lower import prices on inflation will be nil as changes in other prices offset the effect of import prices. however, the conclusion that inflation is determined only by monetary policy choices