Explanation:

Recently, the RBI, decided to keep the benchmark interest rates of the economy unchanged. In a fast-growing economy, incomes go up quickly and more and more people have the money to buy the existing bunch of goods.

• As more and more money chases the existing set of goods, prices of such goods rise.
• In other words, inflation which is nothing but the rate of increase in prices.
• To contain inflation, a country’s central bank typically nudges up the interest rates in the economy.
• By doing so, it incentivises people to spend less and save more because saving becomes more profitable as interest rates go up.
• As more and more people choose to save, money is sucked out of the market and inflation rate moderates. In general, when interest rates are low, the economy grows and inflation increases.
• Conversely, when interest rates are high, the economy slows and inflation decreases.

Hence both statements are correct.