March 19 (UPI) — There’s a 99% chance the Federal Reserve will hold interest rates steady Wednesday as recession fears arise.
The decision by the Fed will be the first one after the economic shock of tariffs triggered a trade war and stock market volatility.
The CME Group’s Fed Watch tool that tracks target interest rate probabilities among interest rate traders shows a 99% probability of no interest rate change Wednesday.
Tariffs created a heavy loss week for stocks last week with the Dow Jones Industrial Average seeing its steepest one-week decline since March 2023.
The S&P 500 finished last week 10% down, officially in correction territory.
Trump administration tariffs on Mexico, Canada, the European Union and China set off a response of retaliatory tariffs on steel and aluminum from both the EU and Canada. China has also retaliated with higher tariffs against American goods.
“I think it may be one or zero cuts this year, particularly if the tariffs stick. I don’t think they’re going to try and bail out the economy by cutting rates, because they know that if they stoke inflation, they’re going to have to go back and start all over again,” Allianz Trade North America senior economist Dan Smith said.
Chair Jerome Powell said on Capitol Hill on Feb. 11 that the Fed is in “no hurry” to change interest rates.
He said the economy remains strong and with interest rate policy already “significantly less restrictive” there need be no hurry on rate adjustments.
Stocks plummeted on March 10, just a day after President Donald Trump said during an interview that the United States could face a recession.
Treasury Secretary Scott Bessent added to the recession fears on March 10 when he said he could not guarantee that the U.S. would not go into recession.
Twenty-three Nobel prize-winning economists saw this coming when they signed a letter in October, 2024 that said Trump economic policies would be inflationary.
They said economic policies advocated by Vice President Kamala Harris would result in stronger economic performance.
Trump polices “including high tariffs even on goods from our friends and allies and regressive tax cuts for corporations and individuals, will lead to higher prices, larger deficits, and greater inequality,” the economists wrote.
