(Reuters) -The Federal Reserve won't lower interest rates at its policy meeting next week, but could deliver the first of a set of rapid-fire reductions in borrowing costs in June if rising fears of an economic downturn triggered by a trade war materialize. 

At least that's where the betting is in futures markets, where contracts that settle to the Fed's policy rate were increasingly priced for quarter-percentage-point reductions in June, July and October following U.S. President Donald Trump's remarks last weekend about a "period of transition" as he ratchets up tariffs on China, Canada and Mexico. U.S. stocks and Treasury yields also dropped on Monday on concern that his comments signaled a coming recession.

Fed Chair Jerome Powell on Friday said the U.S. central bank is in no rush to cut rates, with the labor market still strong, inflation on a bumpy path toward the U.S. central bank's 2% goal, and uncertainty high over the effect of Trump's trade, fiscal, immigration and regulatory policies. 

Economists say those policies could drive prices higher and slow the economy at least in the near term. Goldman Sachs economists on Monday cut their U.S. growth forecast to 1.7%, and raised their inflation forecast. Such a scenario could force the Fed to make a tough choice between keeping pressure on inflation by leaving its policy rate in the current 4.25%-4.50% range or cutting rates to cushion the labor market against deterioration.

While markets are betting on the latter approach, some economists see the Fed slow-walking rate cuts to keep tariff-inflated prices from stoking household and business inflation expectations, which could deepen the chance of persistently high actual inflation.

"Despite a calm exterior, (Fed policymakers) grow increasingly anxious about the rising risks to both sides of the mandate and the institution's ability to resist pressure from U.S. President Donald Trump to cut rates should the labor or financial markets begin to slide before the Fed can gauge the inflationary impacts of not just tariffs, but the entire Trump agenda," Tim Duy, chief U.S. economist at SGH Macro Advisors, wrote in a note. "A slow-to-react Fed will draw the ire of the Trump administration."

The Fed has kept its policy rate unchanged this year after cutting it by a full percentage point in 2024. Policymakers will have more data to sift through this week, with a report on job openings due on Tuesday and the release of the Consumer Price Index for February on Wednesday.