new study by the World Bank has revealed that with central banks across the world simultaneously interest rates in response to inflation, the world be edging toward a global recession in 2023 and a of financial crises in emerging markets and economies that would do them lasting harm. banks around the world have been raising rates this year with a degree of synchronicity seen over the past five decades—a trend that is to continue well into next year. central bank with a high degree of credibility firmly expectations of price stability. The monetary transmission mechanism is characterised by long, and uncertain time lags. Thus it is difficult to the precise effect of monetary policy actions on economy and price level. Hence Central Banks assume that they have the ability to the rising consumer prices via increasing rates. Hence both statements are correct and II is the correct explanation of statement I.