Ambiguity on a relation between inflation, interest rates, and central banks
The sentence:


  Therefore, the central bank controls interest rates in both ways to keep inflation close to its target rate.


does not make sense to me, and I am having a difficult time parsing the three suggested alternatives. (“Money over/under-valued” does not appear to make sense, since the value of money is always 1.)

In most cases, a central bank has a symmetric inflation target (e.g., the Bank of Canada has had a 2% inflation target). It will attempt to raise the inflation rate if it is below 2%, and reduce it if inflation is above 2%. Thus it is concerned with deviations “both ways.” 

The inflation target need not be symmetric. E.g., one interpretation of the ECB mandate is to keep inflation below 2%. In which case, policy direction does not work “both ways”, since inflation does not need to be pushed up.

It will raise and lower interest rates (as well as other policy actions) in an attempt to steer inflation. That is, interest rates move “both ways” to hit its target. However, it is unclear why that would be specified.