Economists confirm US recession: WSJ

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policy makers, the Journal said, meet on Tuesday, and futures markets are fully pricing in at least a 0.5-percentage-point cut in the rate and indicating a 90per cent probability of a 0.75-point cut.

Officials had, before this week, been unconvinced that a 0.75-point cut was needed, given signs that inflation psychology is worsening, the report added.

But those views, it says, may have been affected by continued upheaval in credit markets, as well as weak retail sales and employment data.

Market participants were said this would be a risky time to cut rates less than investors expect. Most forecasters, the Journal said, expect an economic recovery to begin in the second half of this year, as the government's economic-stimulus package and the interest-rate cuts begin to spur the economy.

By the end of the year, they expect inflation to be running at an uncomfortably high 2.7percent, raising the question of when the Fed, the Central bank of the United States, might start raising rates.

Some 84 per cent of economists in the survey said the Fed was too slow to raise interest rates in 2003 and will want to avoid that mistake.

The survey, the report says, suggests the darkening outlook may have made Fed Chairman Ben Bernanke's job less secure, especially with a new president coming on the job in less than a year.