If the Monetary Growth Rate Is Far Above the Target

Multiple Choice

If the monetary growth rate is far above the target range previously announced by the central bank, financial markets will assume that

A) the central bank will reduce money supply in the near future, which may push up interest rates
B) the rate of inflation will increase soon, which may lead to higher nominal interest rates
C) anticipation of higher inflation will increase the demand for credit from firms or households and this will push up interest rates
D) all of these are possible
E) none of these are possible