You are the head of a country's central bank. A major geopolitical conflict disrupts global oil pipelines, causing a sudden and significant increase in the price of energy. As a result, the country's overall price level rises sharply, while businesses, facing higher production costs, cut back on production and lay off workers. You have two primary policy options:

Option A: Raise interest rates significantly to combat the rising price level. Option B: Lower interest rates to encourage business investment and consumer spending to combat the fall in output.

Evaluate the likely consequences of each policy option. Which option would you choose, and what is the fundamental trade-off you are forced to make?