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?
Correct Answer — A
Explanation
Post-pandemic central banks worldwide did raise rates to tame inflation, acting on the belief that monetary policy tools genuinely allow them to counteract rising prices — making Statement II a direct explanation of Statement I.