Consider the following statements:
Statement-I: In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes.
Statement-II: Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means.

Which one of the following is correct in respect of the above statements?

Correct Option: Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

Statement-I is correct because in the post-pandemic period, central banks across the globe (such as the US Federal Reserve, RBI, European Central Bank) aggressively hiked interest rates to combat soaring inflation driven by supply chain shocks and fiscal stimuli. Statement-II is correct and explains Statement-I because central banks act under the fundamental monetary policy mandate and consensus that raising interest rates dampens aggregate demand and counters rising consumer prices. Therefore, both statements are correct and Statement-II is the correct explanation for Statement-I.