The article explores how exchange rate pass-through impacts CPI inflation targeting monetary policy. In the short term, delayed pass-through affects policy more than incomplete pass-through, especially with interest rate smoothing. Imperfect pass-through doesn't necessarily increase real exchange rate variability for certain CPI targeting cases. Pass-through inversely relates to CPI inflation insulation from foreign shocks. When pass-through decreases, the trade-off between stabilizing CPI inflation and output depends on the strictness of CPI targeting and the type of imperfect pass-through.