question_answer

Directions: In each of the following questions a short passage is given with one of the lines in the passage missing and represented by a blank. Select the best out of the five choices given to make the passage complete and coherent. (Coherent means logically complete and sound.)

Central banks generally try to move gradually and not go for big cuts unless it is absolutely warranted. It should also be remembered that we are in an inflation targeting regime which means that the central banks are more cautious on inflation. From the RBI's communication, it seems that they are targeting a 4 per cent inflation over the medium term. ____. The other aspect is that one should not get too much carried away by really low inflation levels right now, as it is expected to move up from current levels (though not too much).

A)  However, if inflation goes up faster than expected, we could even see a rate cut.

B)  For that, the monetary policy would have to be extra cautious.

C)  Going ahead, the monetary policy will be data- driven and react to the direction in which the data move.

D)  There are many factors required for full-fledge revival.

E)  We need to see the overall credit in the system.