Question
Consider the following statements:
Statement - I: In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hike.
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 the above statements?
(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
(b) Both Statement-I and Statements-II is are correct and Statement-II is not the correct cexplanation for Statement-II
(c) Statement-I is correct but Statement-II is incorrect
(d) Statement-I is incorrect but Statement-II is correct
Answer:
A
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Explanation:
In response to the economic impact of the COVID-19 pandemic, some central banks have implemented interest rate hikes as a part of their monetary policy measures. The aim of these hikes is to manage inflation, stimulate economic growth, or address other financial stability concerns.
Central banks play a crucial role in managing inflation by using various monetary policy tools. They adjust interest rates, regulate money supply, and implement other measures to influence borrowing costs, liquidity, and overall economic activity. These actions are taken to control inflation and stabilize consumer prices.