Stimulus cut

Fed minutes on September showed that if the US economic recovery continues at current levels, the central bank will start cutting bond purchases by 15 billion a month from mid-November or December.

On Wednesday, stock market investors received two important reports: data on consumer price growth in September and the publication of minutes of the Federal Open Market Committee FOMC meeting.

The main US stock indices closed on the plus side on Wednesday: S&P 500 rose 0.3%, Nasdaq Composite gained 0.73%, Dow Jones finished the trading without changes.

According to minutes from the Fed's September meetings, officials plan to reduce the current pace of purchases of Treasury and mortgage-backed securities by $10 billion and $5 billion each month starting in mid-November or December. Meanwhile, the planned end date for the purchases is mid-2022, should the current recovery trends continue.

The Fed has been buying these assets at a rate of $120 billion per month since June 2020 as a measure to support and recover the US economy in a pandemic crisis environment.

September minutes showed that Fed members lowered their GDP estimates for this year but raised their inflation forecast and expected unemployment to be lower than previously estimated. Nevertheless, Fed officials said the current "economic recovery is broadly on track" and gives the central bank reason to start cutting its stimulus.

Economists expect the Fed to announce a plan to reduce bond purchases at the end of its next meeting on 2-3 November. The high inflation rate in the USA is pushing towards this step. The inflation report for September showed a 0.4% increase in the consumer price index compared to August and a 5.4% increase compared to the previous year. This represents a slight increase from the 0.3% growth rate of the consumer price index in August.

Economists say that the data shows a sustained pattern of inflation, which is attributable to the persistence of rising energy prices, transport problems and semiconductor shortage problems.

According to an International Monetary Fund forecast released this week, US inflation should reach 4.3% this year and fall to 3.5% in 2022 and 2.3% in 2023.

At the same time, the IMF pointed to the potential need to adjust monetary policy as a response to high inflation.