US Fed's high rates spur slowdown fear, heightens chances of recession

The turmoil shaking global financial markets reflects a sudden fear that the Federal Reserve may have held its key interest rate too high for too long, heightening the risk of a US recession.

Economists and Wall Street traders now expect the Fed to cut its benchmark rate, which influences borrowing costs for consumers and businesses, much faster than they thought just a week ago. Chair Jerome Powell has often stressed that the Fed could quickly lower rates if it decides that it's needed to bolster the economy.

The periodic fear of a forthcoming recession has been a hallmark of the post-pandemic economy and has proved wrong every time. Instead, contrary to what most analysts have predicted, steady economic growth and a solid pace of hiring have endured.

In the past, the US economy would often flash telltale signals when it was in or near a recession. But those red lights have gone haywire since the COVID-19 pandemic struck and upended normal business activity.

The latest red flag w