One of the central topics in the US right now is the Fed's quantitative easing program. This program allows the regulator to pour at least $120 billion into the US economy monthly. This program has made the US inflation rate spike at its highest 5.4% for 13 years. Despite this, the program did recover the US economy at a very fast pace after the pandemic and crisis. One cannot print billions forever. In the US they got used to it, but while recovering the economy and employment market the Fed is trying to flatten the inflation rate to 2%. Since many other central banks around the world are striving for this target CPI growth yearly, we may conclude that this is an "acceptable" level of inflation. However, it is impossible to decrease the price growth rate without reducing the injection of money into the economy. Recently, we heard much about the Fed to announce timings for the QE program taper. Several members of the Federal Open Market Committee expressed their intention to vote in favor of ending the program in the near future.
According to the survey by Reuters among US economists, the vast majority think that in September the Fed will officially announce its plans on reducing the purchase of assets. The experts came to this conclusion after it became known last week that the unemployment rate fell to 5.4% and NonFarm Payrolls grew by almost 1 million jobs for the second month in a row. Among 43 economists 28 said the meeting in September would dismiss the QE program. The rest argued that the regulator will postpone this decision until November or December. Jerome Powell himself has not mentioned quantitative easing recently and has not commented on it in any way. However, he said the US economy was not ready for the program to be removed. There is a little chance that the Fed will do it shortly. Most likely, in September there will be meeting on action plan for its gradual reduction. Thus, the probability that we will really see this after the next Fed meeting is really high. The USD may react to this with growth. From our point of view, this growth is unlikely to be strong and stable. Stock indices in the US will hardly change their upward trend in the coming months. We have already said that they continue to rise precisely because the Fed prints tons of money, which eventually flows into the stock market. As long as the Fed keeps pouring money into the economy, stock indices may continue to climb.