Central Bank's Role in Controlling Inflation: A Research Essay
6 Pages Posted: 25 Apr 2014
Date Written: April 16, 2014
This particular research essay focuses the role of central bank to control inflation in economy generally and SBP controlling mechanism particularly. It is an admitted fact that inflation and poverty are strongly correlated. Inflation is a deadly poison which not only hallows the economic infrastructure of the county but also increase poverty, tensions, worries, and economic imbalances in the society. If we pay a cursory attention to the history, poverty which is child birth of inflation, has been proved the reason of many deadly revolutions in which Reign of Terror is best example for reference. France and Germany are such two evident whose root cause of revolution is poverty which happened due to hyper-inflation. Central bank is gigantic player of financial system who supervises and regulates all the financial system along with the responsibility to control inflation in economy. Restrictive monetary policy can be more beneficial if State Bank of Pakistan pays attention to following issues. SBP should minimize the Government borrowing for decreasing the money supply in economy.
Keywords: inflation, poverty, central banks, monetary policy
JEL Classification: E51, E52, P24
Suggested Citation: Suggested Citation