Fed interest rate outlook: Powell can only reassure the market to a limited extent, and the threat mainly comes from the White House

On 17 March, Fed Chair Jerome Powell faces a tricky task this week, reassuring investors that the economy's fundamentals remain solid and signaling that policymakers will be ready to intervene if necessary at the interest rate decision in the early hours of Thursday. Powell's touting of the resilience of the U.S. economy comes at a time when Trump's rapid escalation of the trade war has sparked unease and sent U.S. stocks tumbling sharply over the past month. Consumer confidence is falling and bond yields are falling as concerns about the economic outlook intensify. Dominic Constance, head of U.S. macro strategy at Mizuho Securities, said: "Powell needs to send some kind of signal that they are watching the stock market. Officials can't ignore the recent decline." Economists widely expect the Fed to cut interest rates twice this year. Some investors warn that if officials continue to signal that there will only be two rate cuts in 2025, it will be all the more necessary for the Fed chairman to emphasize that the Fed is willing to adjust borrowing costs if there are problems in the labor market. James Esser, portfolio manager at Marlborough Investment Management, said: "The Fed is likely to make the situation slightly better or slightly worse at the margin. But obviously they can't fully calm the market, because the blow to market sentiment is mainly from the White House." Aside from escalating and evolving tariff threats to trading partners, the Trump administration has done little to downplay the risk of a recession. ( gold ten )