Stock market players at the moment do not think about the likelihood of a recession and ignore the fact that inflation is still much higher than the Fed expects, notes Maria Vassalou of Goldman Sachs. Investors are confident that the regulator will ease monetary policy, but their mood may be too optimistic, the bank warned. About this writes the portal investing.com, referring to the publication of Business Insider.

High inflation is likely to encourage the Fed to keep its key rate near 5% for quite some time. The current quotes do not take into account the possibility of the regulator's prolongation of harsh measures to influence the economy. Players are making the mistake of ignoring this factor and betting on the strength of the U.S. economy, Vassaloo notes.

If necessary, the Fed can raise the rate to a higher level than expected, as its head Jerome Powell has repeatedly said. At the same time, according to Vassaloo, once the rate is raised, it should not be expected to fall immediately - this is not in the regulator's practice, as it is not considered an effective approach.