In the last few days, key US stock indices have been declining. So far, this decline cannot even be called a correction or a pullback since the index values continue to remain near their absolute highs. However, it makes sense to admit that the growth of the indices has temporarily stopped. We have already said earlier that the key reason for the growth of the US stock market in the last year and a half was the Fed's policy of injecting hundreds of billions of dollars into the economy. Thus, only the Fed's rejection of the quantitative stimulus program can stop the global growth of indices. In principle, there are now two main factors that affect the development of this situation. The first is the attitude of the members of the monetary committee. Over the past few weeks, the majority of members of the monetary committee have spoken in favor of an early curtailment of the QE program. And this moment can cancel out all the factors that could delay the completion of quantitative stimulus. The fact that the monetary committee members consider it appropriate to tighten monetary policy may already lead to Jerome Powell announcing a gradual curtailment of QE at the September meeting. Yesterday, for example, another FOMC member, Patrick Harker, said that he favors ending incentives. According to the president of the Federal Reserve Bank of Philadelphia, core inflation (not to be confused with core inflation) will be about 4% by the end of the year, and it will gradually decrease to 2% in 2022 and 2023, which is the Fed's goal in the long term. But at the same time, Harker said that he sees increased risks that inflation will exceed these values, so he considers it necessary to start reducing QE. Also, the head of the Philadelphia Federal Reserve Bank said that the QE program should be completed before the Fed decides to start the cycle of raising the key rate "so that the regulator has as many free hands as possible."

The second factor is the inflation indicator, the next report on which will be published today. According to experts' forecasts, the main inflation may decrease to 5.3% y/y by the end of August, and the base inflation may remain at the level of 4.3%. Thus, experts do not expect that the consumer price index will begin to decline now. The actual value of inflation may present a surprise. If its value is higher than 5.4%, it will mean that despite all the conclusions of the FOMC representatives, prices continue to grow at a high pace in the United States. It will be another factor in favor of curtailing QE in the shortest possible time. If inflation falls to 5.2% or even more by the end of August, this may untie the hands of the Fed and allow it to wait until November or December to announce the curtailment of QE since the indicator of the state of the labor market is no less important for the Fed than inflation.