The key indices of the US stock market - Dow Jones, NASDAQ, and S&P 500 - ended Wednesday with a minimal increase. Yesterday was not super interesting, from the point of view of macroeconomic statistics and the "foundation". Recall that the stock market reacts more clearly to any economic events. And yesterday there were few of them. The report on orders for long-term goods turned out to be slightly weaker than forecasts, and the evening minutes of the Fed only confirmed what the markets have known for a long time. The Fed rate will be raised by 0.5% twice, in June and July. This decision is now supported by the majority of the members of the monetary committee. Also, starting in August, the regulator will sell treasury and mortgage-backed securities worth $ 95 billion, which is also not news to anyone. Thus, the protocol turned out to be extremely boring, since its main theses have long been known to the markets. If so, then there was no need to wait for a strong reaction from these very markets. As for the prospects of stock indices and stocks, they remain the same. We can believe that the foreign exchange market has already won back some or all of the future rate increases, but the stock market usually reacts to what is happening at the place and time. Therefore, we believe that the more the Fed's monetary policy tightens, the more the stock market will fall.

Of course, half of the Fed's minutes were devoted to inflation. Although in April it finally began to slow down, a lot of experts, including us, believe that this is, if not an accident, then certainly not the fact of the beginning of the period when inflation will decrease. We can see that, for example, in the UK, the rate has also been raised to 1%, and inflation has been growing and growing. Thus, the April decline may be just an isolated case, a correction on an upward trend. It will be possible to wait for its significant slowdown only after the rate is raised to at least 2% and the Fed's balance sheet begins to shrink. And even in this case, it may take one and a half to two years to return it to the target level. Therefore, most likely, James Bullard is right in this matter, who takes the most "hawkish" position. He believes that by the end of the year the rate should be raised to 3.5%, so that in 2023 and 2024 when inflation slows down, the Fed will have the opportunity to ease monetary policy. Naturally, the protocol also noted the situations in Ukraine and China. Recall that the geopolitical conflict with Russia continues in Ukraine, and in China, there was a chain of "lockdowns" due to the "coronavirus". All this greatly affects the supply chain, as well as the rise in energy prices, which pull up the prices of everything else. It is still unclear how central banks will work with external factors that are beyond their control.