Markets saw increased volatility this week as a higher than expected inflation report was released. Depending on your shopping list, you may have encountered higher prices on products like used cars and iron ore.

We review three factors:

• 
the base effect, 


• surprises in the consumer price index,

• 
inflationary pressures during recession to expansion transitions.


The takeaway, we don’t expect the Federal Reserve to change course on its monetary policy any time soon. Further, we anticipate that interest rates will be kept near zero with the fed’s policies remaining accommodative.

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