March Fed rate cut odds collapse to near zero as recession fears fade

The odds that the Federal Reserve will cut its benchmark interest rate on March 18 have dropped to near zero as of March 11, as recession fears fade.

According to data analysed by Finbold, Kalshi traders are predicting a 99% chance that the Fed will maintain its lending rate between 3.50% and 3.75%. The prediction traders believe that there is a 2% chance that the Fed will cut its rate by 25 bps next week.

Why are traders pessimistic about a Fed rate cut in March

The main reason why prediction traders are pessimistic about a potential rate cut in March is because inflation has remained sticky amid a relatively strong economy. Moreover, the Consumer Price Index (CPI) increased by 0.3% for February, thus pushing the 12-month inflation rate at 2.4% based on data from the Bureau of Labor Statistics released on Wednesday.

“CPI inflation for February was along expectations, but this is the calm before the storm that will show up due to surging gasoline prices in March. Still, this report does show that the Fed has an inflation problem, even if you set aside the energy shock. Tariff impacts are still hitting core goods inflation, while services inflation outside housing remains hot,” Sonu Varghese, chief macro strategist for the Carson Group, stated.

Meanwhile, Kalshi traders are now predicting a 28% chance that the United States will plunge into a recession in 2026, down from recent highs of 34–36%.

Furthermore, Wells Fargo analysts have argued that the U.S. economic expansion should continue in 2026, supported by services, demographics, and fiscal policy. The bank added that a major persistent oil shock would be needed to trigger a recession before the end of this year.