UPSC PRELIMS · ECONOMICS · MONETARY POLICY — INFLATION & INTEREST RATES
Consider the following statements : Statement-I : . In the post-pandemic recent past, many Central Banks worldwide had carried out interest rat~ hikes. Statement-II : Central Banks generally assume that· they have the ability to counteract the rising consumer prices via monetary policy means. Which one of the following is correct in respect of t~e above statements?
Take a breath. Choose one. Press A–D on your keyboard if you like.
EXPLANATION
Central banks raised policy rates after the pandemic, and monetary policy is used to influence demand and inflation. Statement II explains the rationale for the rate hikes, so both are correct with II explaining I.
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