Interest rate hikes impact core prices more than headline inflation in India.
The article analyzes how changes in interest rates affect inflation in India. It focuses on two types of inflation measures: overall prices and core prices. The study shows that when interest rates go up, core prices react more quickly than overall prices. This suggests that interest rates have a stronger impact on core prices. The researchers also tested different ways of analyzing the data to make sure their results were reliable. Overall, the findings suggest that targeting core prices could be an effective strategy for managing inflation in India.