Monetary policy and its impact on economic growth has been a recurring theme in IELTS Writing Task 2, appearing in approximately 15% of recent economic-themed questions. This topic’s frequency has increased notably since 2020, likely due to global economic challenges and central banks’ responses worldwide. Understanding how central bank policy impacts currency rates is crucial for achieving a high score on this topic.
Monetary policy and economic growth illustration showing central bank and economic indicators
Analysis of Common Question Types
Some people believe that central banks should focus primarily on controlling inflation, while others argue they should prioritize economic growth. Discuss both views and give your opinion.
Understanding the Question
- Topic: Central bank policy priorities
- Task: Discussion + opinion
- Key points to address: Inflation control vs. economic growth
- Scope: Economic policy implications
Sample Essay 1 (Band 8.0)
The debate over whether central banks should prioritize inflation control or economic growth has intensified as impact of central bank policy on inflation becomes more evident. While both objectives are crucial, I believe maintaining price stability through inflation control should be the primary focus.
Those advocating for growth-focused policies argue that economic expansion creates jobs and raises living standards. They contend that prioritizing growth can lift millions out of poverty and generate resources for social development. Furthermore, robust growth can strengthen a nation’s global competitiveness and attract foreign investment.
However, proponents of inflation control emphasize its fundamental importance to economic stability. Unchecked inflation erodes purchasing power, particularly affecting lower-income groups, and creates economic uncertainty that discourages investment. The successful management of inflation expectations also helps maintain currency stability and prevents economic volatility.
In my view, controlling inflation should take precedence because it establishes the foundation for sustainable growth. Historical evidence from various economies demonstrates that central bank’s role in economic recovery is most effective when focusing on price stability. Well-anchored inflation expectations create an environment conducive to long-term investment and steady economic expansion.
Moreover, the experience of developing nations shows that high inflation can quickly negate growth benefits. Countries maintaining consistent price levels typically achieve more sustainable development compared to those prioritizing rapid growth at the expense of price stability.
Sample Essay 2 (Band 6.5)
The role of central banks in managing the economy is very important. Some people think they should focus on controlling inflation, while others believe economic growth is more important. I will discuss both views and give my opinion.
People who support focusing on inflation control have good reasons. When prices go up too much, it makes life harder for everyone, especially poor people. High inflation makes it difficult to save money and plan for the future. Also, businesses find it hard to make decisions when prices are unstable.
On the other hand, supporters of economic growth say it creates more jobs and opportunities. When the economy grows, people can earn more money and have better lives. Growth helps reduce unemployment and gives the government more money from taxes to spend on public services.
The role of public policy in managing economic crises shows that both issues are connected. However, I think controlling inflation is more important because without stable prices, growth cannot last long. Many countries have shown that high inflation can destroy economic progress very quickly.
In conclusion, while both goals are important, I believe central banks should focus more on controlling inflation to create a stable foundation for growth.
Key Vocabulary
- monetary policy (n) /ˈmʌn.ə.ter.i/ – policies related to money supply and interest rates
- inflation expectations (n) /ɪnˈfleɪ.ʃən/ – what people think future inflation will be
- price stability (n) /praɪs stəˈbɪl.ə.ti/ – condition where prices don’t change much
- purchasing power (n) /ˈpɜː.tʃə.sɪŋ paʊər/ – how much can be bought with money
- economic volatility (n) /ˌiː.kəˈnɒm.ɪk ˌvɒl.əˈtɪl.ə.ti/ – rapid economic changes
For practice, try writing your own essay addressing how to manage economic crises in developed countries and share it in the comments for feedback. Consider exploring similar topics like the relationship between interest rates and economic growth, or the impact of quantitative easing on national economies.
