Fed Put On Standby, While Trump Put May Be Kaput? Analysts Expect Jerome Powell To Pivot To A Measured Stance Amid Economic Uncertainty

The Federal Open Market Committee’s meeting begins today and the market consensus expects the central bank to hold key interest rates in the range of 4.25% to 4.50%. Despite this, analysts believe that Chairman Jerome Powell could pivot to a measured stance while being on standby as the White House remains firm on its policies.

What Happened: According to the CME Group's FedWatch tool, there is a 99% chance that the Federal Reserve will keep interest rates unchanged for the March meeting. However, the probability of ease increases to over 65% from June onwards and over 90% from September onwards.

According to Edward Yardeni, the President of Yardeni Research, the Fed remains on standby and expected to act if inflation is around the 2.0% target and President Donald Trump's policies lead the economy into a recession.

“The Trump Put may be kaput, but the Fed Put remains on standby,” he said.

When a sharp market decline risks economic damage, the “Fed put” implies the Federal Reserve will cut interest rates. The “Trump put,” on the other hand means that the administration would adjust its policies to avoid a downturn if market fears intensified.

“I am expecting a dovish FOMC statement that signals the Fed may be cutting soon. I am expecting the dot plot to signal two more key interest rate cuts this year,” said Louis Navellier, the chairman and CIO of Navellier & Associates Inc. He foresees four key interest rate cuts in 2025 amid worldwide economic contraction.

Additionally, Eugenia Mykuliak, the founder and executive director at B2PRIME Group believes that “The hawkish tone of Fed Chair Jerome Powell may likely change into a more measured one as he has to cite the economic uncertainty — especially tariff uncertainty.”

Why It Matters: Analysts expect Trump to remain firm on his economic policies as he has dismissed the significance of the stock market in his recent comments. He has made statements saying "you can't really watch the stock market" and "markets are going to go up and they're going to go down."

Furthermore, Treasury Secretary Scott Bessent fueled concerns on Sunday, telling NBC he’s unfazed by the stock slump, calling corrections “healthy,” but warning there’s “no guarantee” the U.S. will avoid recession.

Meanwhile, while speaking at the University of Chicago on March 7, Powell cited a solid labor market and near-target inflation, emphasizing the Fed’s dual mandate. He indicated the Fed will hold rates if inflation remains high, and cut them if employment weakens. Powell also stated that officials were not in a "hurry" to adjust interest rates.

Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Monday. The SPY advanced 0.77% to $567.15, and the QQQ also jumped 0.65% to $482.77, according to Benzinga Pro data.

On Tuesday, the futures of all four benchmark indices declined. Dow Jones was down 0.25%, whereas the S&P 500 index dropped 0.33% and Nasdaq 100 fell by 0.44%. The small-cap gauge Russell 2000 declined 0.51%.

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