Refined core of unrefined prices.

"Financial markets have become volatile once again, owing to fears that the US Federal Reserve will have to tighten its monetary policy significantly to control inflation. But many investors still hope that the Fed will go easy if asset prices start to fall substantially," wrote Prof Raghuram Rajan. "The Fed cut its target for the federal funds rate, the rate banks pay to borrow from each other overnight, by a total 1.5 percentage points at its meetings on March 3 and March 15, 2020. These cuts lowered the funds rate to a range of 0% to 0.25%," Brookings. In its forward guidance the Fed promised to keep rates at these levels until the labor situation improved and it resorted to quantitative easing and other means to increase liquidity. On the fiscal side, "The US Congress passed multi-trillion-dollar bills offering something for everyone." "All this makes a return to the previous consensus more difficult." "In December, US inflation rose a staggering 7%, a four-decade high, with even core inflation (excluding fuel and food) up 5.5%," wrote Rahul Jacob. "The market is expecting as many as -- gasp -- seven rate hikes this year and even a 0.5% increase in one stroke." "Like the Fed, the Reserve Bank Of India's (RBI) acquiescence on interest rates suggested that it believed inflation was 'transitory'." "The Bank of England raised interest rates to 0.5% on Thursday and nearly half its policymakers wanted a bigger increase to contain rampant price pressures, which the British central bank warned would push inflation above 7%," Reuters. Here, the RBI has stubbornly inflicted an interest rate of 4% since May 2020 even as it predicts an inflation rate of over 5%, ET. The Economic Survey 2022 has coined a new 'refined core inflation', which gives a lower value than the traditional core inflation which excludes volatile food and energy prices, Investopedia. "However, core inflation calculation retains a component called 'transport and communication' under miscellaneous, which is heavily influenced by the fuel prices," moneycontrol. The government and the RBI may create 'refined' values but higher transport costs may lead to higher wage demands or people may reduce expenditure to compensate. Wage rises tend to be permanent. The Manufacturing Purchasing Managers' index (PMI) fell to 54.0 in January from 55.5 in December because of the Omicron variant of Covid and because "high price pressures weighed on business confidence about the year ahead", Reuters. The Services PMI fell to 51.5 in January from 55.5 in December for similar reasons, ET. Yields on the benchmark 10-year bonds rose to 6.87% as the Budget predicted higher government borrowing to boost investments in highways and affordable housing, Reuters. The bond market believes inflation will spike. Yields have risen to 6.931 on the NSE, Investing. Increased prices for people lead to increased borrowing costs for the government. Can't be refined.