1. Raise interest rates to shrink balance sheet: This meeting raised interest rates by 25bp as scheduled. The meeting statement hinted that it would continue to raise interest rates and soon begin to shrink its balance sheet. At the same time, it is pointed out that the conflict between Russia and Ukraine will have an impact on economic activities and aggravate inflationary pressure. Powell reiterated that the economic outlook is highly uncertain, and the policy depends on the data performance, and said that the table reduction plan will be announced as early as May.

2. Bitmap and economic forecast: The latest bitmap shows that interest rates will be raised 7 times in 2022, 3-4 times in 2023 and will stop in 2024.

3. Asset price changes and interest rate hike expectations: This meeting did not exceed the expectations of hawks. After the meeting, US stocks and gold fell first and then rose, US bond yields and US dollar index rose first and then fell, and the number of interest rate hikes implied by interest rate futures did not change much.

Second, release the signal: the Fed's interest rate hike this time will control inflation and avoid economic recession as much as possible. We can judge the time and extent of this interest rate hike from two angles: (1) Before this interest rate hike, the term spread of US debt was very close to that before 1999, and the Federal Reserve * * * raised interest rates at 1999 and continued. (2) Historically, when the PMI of American manufacturing fell below 55%, the Fed often stopped raising interest rates and made linear extrapolation according to the current PMI level and trend. It will take about 14 months to drop below 55%. On the whole, if the Fed continues to raise interest rates at the rate of 1999, it may stop raising interest rates in mid-2023. If the Fed adopts a more moderate pace of raising interest rates, the impact on the economy will be smaller and the time to stop raising interest rates will be delayed. We think the latter situation is more likely. Maintain the previous judgment: the Fed is more likely to adopt a policy combination of "slow rate hike+rapid contraction", and it is expected to raise interest rates four times in 2022 (maybe 50bp at a time). After Q2 inflation inflection point appears, interest rate hike is expected to cool down.

Third, the impact of the Fed's interest rate hike on A shares: In recent years, the trend of A shares and US stocks has become more and more similar, and the style switching is also highly synchronized. Therefore, the impact of the Fed's interest rate hike on the trend and style of US stocks will also have a conduction effect on A shares. The Fed's interest rate hike in the first half of the year will continue to have an impact on A shares, and the impact on growth stocks is expected to be even greater; However, since the second half of the year, the situation has been reversed with great probability.