Analysts at U.S. bank Citigroup Inc (NYSE:C). lowered their forecast for the value of the S&P 500 stock index at the end of this year by 500 points, to 4,200 points, due to stubbornly high inflation and aggressive Fed policy.

“The Fed’s hawkish attitude and the impact of rising real rates on valuations were the defining signs of the market’s decline in the first half of the year,” the Citi analysts wrote.

The bank’s economists believe the probability of a global recession is currently around 50 percent, with the possibility of it starting in mid-2023.

“We may have been too optimistic about U.S. equities this year,” the bank said in a statement. – We expect the market to recover in the second half of the year, but that will only cut into losses since the start of the year.”

The S&P 500 index has lost about 18% since the start of 2022 and is trading Monday evening near the 3,900-point mark.