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Expand chart
Data: CME Group; Chart: Naema Ahmed/Axios

In one week, futures traders have gone from seeing virtually no chance of a rate cut at the Fed's next policy meeting to a more than three-quarters likelihood.

Why it matters: Economists aren't sure a rate cut would be effective at offsetting the damage from the coronavirus outbreak, and would put the Fed in a weaker position to bolster the economy should the U.S. fall into a recession.

  • But under chair Jerome Powell, the Fed has not gone against the market once in two years of policy meetings.

Details: Markets see significant likelihood the Fed cuts rates three times this year, and sees one rate cut each by the European Central Bank and Bank of England this year.

  • This is despite the Fed barely holding U.S. interest rates at a positive real level (above the rate of inflation), the ECB holding rates at -0.5%, and the BoE with rates at all-time lows.

Be smart: "With Fed rate cut probabilities for the March meeting now at 70% either Powell, [vice chair Richard Clarida or N.Y. Fed president John Williams] need to address the shift in market expectations," RSM chief economist Joe Brusuelas tells Axios in an email.

  • "If this is left unattended the Fed runs the risk of a major market upset around its March 17-18 meeting."

Yes, but: “The problem with doing monetary stimulus is that it will have limited impact on the effects of the virus,” Jens Peter Sorensen, chief analyst at Danske Bank, tells Bloomberg.

  • “The COVID-19 virus is keeping people from work, the supply chain is disrupted and tourists are not going to Italy. Monetary policy can do very little.”

Go deeper: Federal Reserve leaves interest rates on hold

Go deeper

The new Washington

Illustration: Sarah Grillo/Axios

The Axios subject-matter experts brief you on the incoming administration's plans and team.

Rep. Lou Correa tests positive for COVID-19

Lou Correa. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

Rep. Lou Correa (D-Calif.) announced on Saturday that he has tested positive for the coronavirus.

Why it matters: Correa is the latest Democratic lawmaker to share his positive test results after last week's deadly Capitol riot. Correa did not shelter in the designated safe zone with his congressional colleagues during the siege, per a spokesperson, instead staying outside to help Capitol Police.

Far-right figure "Baked Alaska" arrested for involvement in Capitol siege

Photo: Shay Horse/NurPhoto via Getty Images

The FBI arrested far-right media figure Tim Gionet, known as "Baked Alaska," on Saturday for his involvement in last week's Capitol riot, according to a statement of facts filed in the U.S. District Court in the District of Columbia.

The state of play: Gionet was arrested in Houston on charges related to disorderly or disruptive conduct on the Capitol grounds or in any of the Capitol buildings with the intent to impede, disrupt, or disturb the orderly conduct of a session, per AP.