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

On March 17, Federal Reserve Chairman Powell faced a delicate task this week, needing to assure investors that the economic fundamentals remain solid while also conveying that policymakers stand ready to intervene if necessary, in the interest rate decision early Thursday morning. As Powell touted the resilience of the U.S. economy, President Trump rapidly escalated the trade war, causing U.S. stocks to plummet significantly over the past month. With growing concerns about the economic outlook, consumer confidence is declining and bond yields are also declining. Dominic Konstam, head of U.S. macro strategy at Mizuho Securities, said: "Powell needs to send some signal that they are watching the stock market. Officials cannot ignore the recent declines." Economists generally expect the Federal Reserve to cut interest rates twice this year. Some investors warn that if officials continue to signal only two rate cuts in 2025, the Federal Reserve chairman will need to emphasize more that the central bank is willing to adjust borrowing costs if the labor market falters. James Estes, portfolio manager at Marlboro Investment Management, said: "The Federal Reserve may slightly improve or slightly worsen the situation at the margin. But they clearly cannot fully reassure the market, as the blow to market sentiment mainly comes from the White House." Apart from issuing constantly escalating and changing tariff threats to trading partners, the Trump administration has not taken many measures to mitigate the risk of an economic downturn.