The Monetary Policy Committee maintained a hawkish stand on the interest rates. In this context, 'hawkish' stand means __________.

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SSC CHSL Exam 2023 Tier-I Official Paper (Held On: 03 Aug, 2023 Shift 1)
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  1. interest rates were decreased
  2. interest rates were increased
  3. interest rates were kept unchanged
  4. money supply was increased

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Option 2 : interest rates were increased
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SSC CHSL Exam 2023 Tier-I Official Paper (Held On: 02 Aug 2023 Shift 1)
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The correct answer is interest rates were increased. Key Points

  • A hawkish stand on interest rates means that the central bank or monetary policy committee is inclined towards raising interest rates in order to control inflation.
  • This is usually done to prevent the economy from overheating due to excessive borrowing and spending, which can lead to inflation.
  • In contrast, a dovish stand on interest rates means that the central bank is more likely to lower interest rates to stimulate economic growth and borrowing.
Additional Information
  • The term "hawkish" comes from the idea of a hawk, which is known for being aggressive and vigilant.
  • A hawkish monetary policy is characterized by a more aggressive stance toward controlling inflation and maintaining price stability.
  • In contrast, a "dovish" monetary policy is named after the image of a dove, which is associated with peace and tranquility.
  • A dovish policy is more focused on stimulating economic growth and reducing unemployment, even if it means accepting a higher level of inflation.
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