The topic of central banks and their role in economic regulation has been a recurring theme in IELTS Writing Task 2, appearing approximately 3-4 times annually over the past five years. Given the current global economic climate and increasing focus on central bank policies and inflation, this topic is likely to remain relevant in future tests.
Central banks play crucial role in maintaining economic stability through various monetary policies
Analysis of Recent IELTS Question
Some people believe that central banks should prioritize controlling inflation, while others argue they should focus on promoting economic growth. Discuss both views and give your opinion.
Question Analysis
- Topic: Central bank priorities
- Task: Discussion + Opinion
- Key elements: Inflation control vs. Economic growth
- Format: 4-5 paragraphs, 250-300 words
Sample Essay 1 (Band 8.0)
In the ongoing debate about central banks’ priorities, some advocate for inflation control while others emphasize economic growth. This essay will examine both perspectives before presenting my view that a balanced approach is crucial for the role of governments in promoting economic stability.
Those supporting inflation control argue that price stability is fundamental to economic health. When inflation is kept in check, businesses can plan effectively, and consumers maintain purchasing power. For example, the success of countries like Singapore and Switzerland demonstrates how strict inflation control creates a stable environment for long-term economic planning and investment. Moreover, uncontrolled inflation can devastate savings and disproportionately affect lower-income groups.
Conversely, proponents of growth-focused policies contend that excessive focus on inflation can stifle economic development. They point to situations where role of government intervention in controlling inflation through high interest rates has led to reduced business investment and higher unemployment. Japan’s experience of prolonged economic stagnation while maintaining very low inflation serves as a cautionary tale.
In my opinion, central banks must strike a delicate balance between these objectives. The optimal approach involves maintaining moderate inflation while supporting sustainable growth. This can be achieved through carefully calibrated monetary policies that respond to economic conditions dynamically. The success of the Federal Reserve during the 1990s exemplifies how maintaining inflation within a target range while supporting growth can create sustained prosperity.
Central bank maintaining balance between inflation control and economic growth objectives
Sample Essay 2 (Band 6.5)
There is much discussion about what central banks should focus on more – controlling inflation or helping the economy grow. I will look at both sides of this issue and share my thoughts.
People who think controlling inflation is most important have good reasons. When prices go up too fast, it makes life harder for everyone. People can’t buy as many things as before, and their savings become worth less. Also, businesses find it hard to plan for the future when prices keep changing.
On the other hand, some people think making the economy grow is more important. They say that if central banks only worry about inflation, it can cause problems. When interest rates are too high to control inflation, it becomes harder for businesses to borrow money and create jobs. This can lead to unemployment and other economic problems.
I believe central banks need to think about both things. They should try to keep prices stable while also helping the economy grow. This is like trying to keep a car moving at the right speed – not too fast or too slow. The best central banks find ways to do both things at the same time.
Key Vocabulary
- monetary policy (n) /ˈmʌnɪtəri ˈpɒləsi/ – actions of a central bank to control money supply
- inflation rate (n) /ɪnˈfleɪʃən reɪt/ – speed at which prices increase
- economic stagnation (n) /ˌekəˈnɒmɪk stæɡˈneɪʃən/ – period of little or no growth
- calibrated (adj) /ˈkælɪbreɪtɪd/ – carefully assessed and adjusted
- purchasing power (n) /ˈpɜːtʃəsɪŋ ˈpaʊə/ – ability to buy goods and services
Conclusion
As discussions about impact of digital currencies on international transactions continue to evolve, similar questions about central bank roles may appear in future tests. Practice writing about related topics such as:
- Digital currencies’ impact on monetary policy
- Financial stability vs. innovation
- Global economic coordination
Share your practice essays in the comments section for feedback and improvement suggestions.
