Question
Download Solution PDFThe Monetary Policy Committee maintained a hawkish stand on the interest rates. In this context, 'hawkish' stand means __________.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe 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.
- 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.
Last updated on May 28, 2025
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