Today’s macro setup is more complex than the headlines suggest.

Markets absorbed a three-part combination:

• The Supreme Court struck down Trump’s emergency global tariffs under IEEPA.
• Trump responded with a temporary 10% tariff under Trade Act authority.
• Q4 GDP printed at 1.4% annualized, roughly half of expectations.
• PCE inflation moved back toward 3%, pushing against the softer CPI narrative.

Here’s the tension.

Slower growth typically pressures the Federal Reserve to cut rates. Weak GDP, declining factory orders, soft ADP, and lower PPI would all support that case.

But tariffs function like a tax on imported goods. They raise price levels. And historically, once price levels step higher, we rarely see broad deflation. What typically follows is slower inflation, not falling prices.

Polymarket currently shows roughly a 94% probability of no change at the March Fed meeting.

I disagree.

If incoming data continues weakening and job numbers are revised lower, the Fed could justify a 25 basis point cut by pointing to stagnating growth and moderating wholesale inflation pressures.

If that occurs, mortgage rates could drift lower and provide support to the housing market and refinance activity.

I’m Ken Martello, Expert Loan Officer, FHA Expert, VA Loan Specialist, and mortgage strategist focused on helping clients navigate volatile rate environments with data-driven decisions.

The next few economic prints will matter more than the headlines.

What do you think the Fed does next?

Hold, cut, or raise?