The Economist notes

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The primary objective of many central banks, including

the Reserve Bank of India and the Bank of Korea, is price

stability. Briefly explain why.

Q270: Reflecting the current extremely low long-term interest

rates in the Eurozone, The Economist notes: “Higher

Inflation may be needed to leave extra- low interest rates

behind”. Explain how long-term interest rates and inflation

are related. Why would this statement make sense in

terms of interest rate forecasting?

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