Central bank policies and their impact on inflation have been a recurring theme in IELTS Writing Task 2 essays. Based on recent trends and past exam topics, it’s highly likely that this subject will continue to appear in future tests. Let’s explore a relevant essay question that has appeared in recent IELTS exams:
Some people think that central banks should prioritize keeping inflation rates low. Others believe that there are more important aims for central banks, such as promoting economic growth. Discuss both these views and give your own opinion.
Analyzing the Question
This question requires candidates to:
- Discuss the view that central banks should focus on low inflation
- Explore alternative priorities for central banks, such as economic growth
- Provide a personal opinion on the matter
Now, let’s examine sample essays for different band scores, starting with a high band score (8-9) response.
Band 8-9 Sample Essay
Monetary policy, particularly the role of central banks in managing inflation and promoting economic growth, is a topic of ongoing debate among economists and policymakers. While some argue that maintaining low inflation should be the primary goal of central banks, others contend that fostering economic growth is equally, if not more, important. In my opinion, a balanced approach that considers both objectives is crucial for overall economic stability and prosperity.
Those who advocate for prioritizing low inflation rates argue that price stability is fundamental to a healthy economy. They contend that low and stable inflation provides a solid foundation for long-term economic planning and investment decisions. When inflation is kept in check, businesses and consumers can make more accurate financial forecasts, leading to more efficient resource allocation. Moreover, low inflation helps preserve the purchasing power of money, which is particularly beneficial for those on fixed incomes, such as pensioners.
On the other hand, proponents of focusing on economic growth argue that central banks should place greater emphasis on stimulating economic activity and job creation. They maintain that pursuing growth-oriented policies can lead to increased employment, higher living standards, and reduced poverty. This perspective suggests that moderate inflation may be acceptable if it accompanies robust economic expansion. Advocates of this view often point to the effects of negative interest rates on banking as an example of how central banks can use unconventional tools to boost economic activity.
In my view, central banks should strive for a balanced approach that takes both inflation control and economic growth into account. While maintaining price stability is undoubtedly important, it should not come at the expense of stifling economic growth and job creation. Central banks can achieve this balance by setting inflation targets that allow for moderate price increases while implementing policies that support sustainable economic expansion. This approach recognizes that some level of inflation may be necessary to facilitate economic growth and prevent deflationary pressures.
Furthermore, central banks should consider the broader economic context when formulating their policies. For instance, during periods of economic crisis or stagnation, prioritizing growth and employment might be more crucial than adhering to strict inflation targets. Conversely, when the economy is overheating, tighter monetary policies to control inflation may be warranted. The impact of government bonds on inflation rates is also a factor that central banks must consider in their decision-making process.
In conclusion, while low inflation is undoubtedly important for economic stability, central banks should not focus on this goal to the exclusion of other vital economic objectives. A nuanced approach that balances inflation control with promoting economic growth is essential for fostering long-term prosperity and resilience in national economies.
Band 6-7 Sample Essay
Central banks play a crucial role in managing a country’s economy. Some people believe that keeping inflation rates low should be their main goal, while others think there are more important aims like promoting economic growth. This essay will discuss both views and provide my opinion on the matter.
Those who support focusing on low inflation rates argue that it’s important for economic stability. When inflation is low, people’s money keeps its value, and they can plan for the future better. This is good for businesses and individuals because they can make better financial decisions. Also, low inflation helps people on fixed incomes, like pensioners, maintain their standard of living.
On the other hand, some people believe that central banks should prioritize economic growth. They think that promoting growth can create more jobs and improve people’s living standards. This view suggests that it’s okay to have slightly higher inflation if it means the economy is growing strongly. Supporters of this idea often point to how central bank policies and inflation can work together to boost the economy.
In my opinion, central banks should try to balance both low inflation and economic growth. I think it’s important to keep inflation under control, but not at the cost of stopping the economy from growing. Central banks could set inflation targets that allow for some price increases while also supporting economic expansion. This way, they can help keep prices stable while also encouraging growth and job creation.
It’s also important for central banks to look at the overall economic situation when making decisions. During tough economic times, they might need to focus more on growth and jobs than on keeping inflation very low. But when the economy is doing very well, they might need to be stricter about controlling inflation.
In conclusion, while keeping inflation low is important, I believe central banks shouldn’t focus only on this goal. They need to consider other important economic goals too, especially promoting growth. A balanced approach that considers both inflation control and economic growth is the best way to help a country’s economy in the long run.
Band 5-6 Sample Essay
Central banks are important for a country’s economy. Some people think they should focus on keeping inflation low, but others think there are more important things to do, like helping the economy grow. I will talk about both ideas and give my opinion.
People who want low inflation say it’s good for the economy. When prices don’t go up too much, people can save money and plan better. This helps businesses and people make good choices about money. It’s also good for old people who get pensions because their money stays valuable.
But other people think central banks should help the economy grow more. They say this can make more jobs and help people earn more money. They think it’s okay if prices go up a little if it means the economy is getting better. Some experts say that how does quantitative easing affect the stock market shows how central banks can help the economy grow.
I think central banks should try to do both things. They should keep inflation low, but also help the economy grow. They could set goals for inflation that allow some price increases but also help businesses grow. This way, they can keep prices stable and help create jobs.
Central banks should also look at what’s happening in the economy when they make decisions. If the economy is having problems, they might need to focus more on helping it grow. But if the economy is doing very well, they might need to be more careful about inflation.
In conclusion, I think keeping inflation low is important, but central banks should not only focus on this. They need to think about helping the economy grow too. Trying to do both things is the best way to help a country’s economy for a long time.
Explanation of Band Scores
Band 8-9 Essay
This essay demonstrates:
- Sophisticated vocabulary and complex sentence structures
- Clear organization with a coherent argument
- In-depth analysis of both viewpoints
- A nuanced personal opinion with well-developed supporting ideas
- Effective use of topic-specific vocabulary and concepts
Band 6-7 Essay
This essay shows:
- Good use of vocabulary with some attempts at more complex structures
- Clear organization, though less sophisticated than the Band 8-9 essay
- Discussion of both viewpoints with some supporting ideas
- A personal opinion that is stated and supported
- Some use of topic-specific vocabulary
Band 5-6 Essay
This essay exhibits:
- Basic vocabulary and simple sentence structures
- A clear attempt to address the question, but with less depth
- Some discussion of both viewpoints, but with limited development
- A personal opinion that is stated but not fully supported
- Limited use of topic-specific vocabulary
Key Vocabulary to Remember
- Monetary policy (noun) /ˈmʌnɪtəri ˈpɒlɪsi/ – The actions of a central bank to regulate the money supply and interest rates
- Inflation (noun) /ɪnˈfleɪʃən/ – A general increase in prices and fall in the purchasing value of money
- Economic growth (noun phrase) /ˌiːkəˈnɒmɪk ɡrəʊθ/ – An increase in the amount of goods and services produced per head of the population over a period of time
- Price stability (noun phrase) /praɪs stəˈbɪlɪti/ – A situation in which the average price level in an economy does not change much over time
- Resource allocation (noun phrase) /rɪˈsɔːs ˌæləˈkeɪʃən/ – The distribution of economic resources among competing uses
- Purchasing power (noun phrase) /ˈpɜːtʃəsɪŋ ˈpaʊə/ – The value of money, defined by the quantity and quality of goods and services it can buy
- Deflationary pressures (noun phrase) /diːˈfleɪʃənəri ˈpreʃəz/ – Forces that tend to cause a decrease in the general price level
- Overheating economy (noun phrase) /ˌəʊvəˈhiːtɪŋ ɪˈkɒnəmi/ – An economy that is expanding at an unsustainable rate
- Quantitative easing (noun phrase) /ˈkwɒntɪtətɪv ˈiːzɪŋ/ – A monetary policy in which a central bank purchases government securities or other securities from the market to lower interest rates and increase the money supply
- Fixed income (noun phrase) /fɪkst ˈɪnkʌm/ – A type of investment that provides a regular, predetermined payout
Conclusion
Understanding the complex relationship between central bank policies and inflation is crucial for success in IELTS Writing Task 2. The sample essays provided demonstrate how to approach this topic at different band levels. To improve your writing skills, try crafting your own essay on this topic and share it in the comments section below. This practice will help you develop the necessary vocabulary, analytical skills, and essay structure required for a high band score.
For further practice, consider exploring related topics such as:
- The role of digital currency on national economies
- The impact of global economic crises on central bank policies
- The relationship between interest rates and economic growth
Remember, consistent practice and familiarity with economic concepts will greatly enhance your performance in IELTS Writing Task 2.