How did interest rates behave during the late 1980s monetary policy?

During the late 1980s, interest rates experienced a significant increase, largely influenced by the actions of central banks aimed at combating inflation and stabilizing the economy. Specifically, during this period, interest rates reached nearly 18%.

The decision to raise interest rates was a response to high inflation rates, which were prevalent during the 1980s. By increasing interest rates, central banks aimed to slow down economic activity, thereby reducing inflationary pressures. This strategy was part of a broader monetary policy that sought to establish control over inflation and foster economic stability.

The other answer choices reflect different scenarios that did not occur during this specific period. The rates did not fall significantly below 10%, nor did they remain stable around 5%. The highest interest rates recorded were nowhere near 25%, indicating that choice B accurately captures the monetary policy behavior and its impact on interest rates during that time.