In an interview with CNBC on Thursday, Moody’s Analytics chief economist Mark Zandi said recent job numbers have been so dismal that it’s possible the U.S. may already be in a recession.

“I think the Federal Reserve desperately wants to avoid that kind of outcome,” he added. “Obviously nobody wants a recession. But also in the context of Fed independence, they really don’t want to get blamed for going into a downturn because that would impair their ability.”

Wharton finance professor Jeremy Siegel laid out just such a scenario in July, when he told CNBC that Fed Chairman Jerome Powell may need to resign in order to preserve the central bank’s long-term independence. 

His reasoning: If the economy stumbles with Powell still at the helm, then Trump can point to him as the “perfect scapegoat” and ask Congress to give the White House more power over the Fed.

“That is a threat. Don’t forget, our Federal Reserve is not at all a part of our Constitution. It’s a creature of the U.S. Congress, created by the Federal Reserve Act 1913. All its powers devolve from Congress,” Siegel explained. “Congress has amended the Federal Reserve Act many times. It could do it again. It could give powers. It could take away powers.”

Meanwhile, Stephen Miran is set to join the Fed—without resigning as chair of the White House’s Council of Economic Advisers—after previously calling for changes that would erode its independence before he joined the Trump administration.

In a note last month, JPMorgan said Miran’s appointment to the Fed “fuels an existential threat as the administration looks likely to take aim at the Federal Reserve Act to permanently alter U.S. monetary and regulatory authority.”

Fed rate cut

Despite the enormous pressure Trump has put on the Fed to lower rates, even trying to fire Governor Lisa Cook, central bankers have largely resisted his calls so far. But the sudden deterioration in the job market has made a rate cut a virtual certainty.

The Fed meets Tuesday and Wednesday, and the only question on Wall Street is whether rates will come down by 25 basis points or 50 basis points from the current level of 4.25%-4.5%.

In a note on Friday, JPMorgan chief U.S. economist Michael Feroli said he expects two or three dissents for a larger cut and no dissents in favor of keeping rates unchanged.

At the Fed’s last meeting Fed governors Christopher Waller and Michelle Bowman dissented from other policymakers by calling for a quarter-point cut. It’s possible they could dissent again by voting for a half-point cut, Feroli said, with Miran expected to “dutifully dissent for a larger cut” as well.

On Thursday, Zandi said the bar is high for a half-point cut, but “there’s a possibility we could get over that.” He added that a JPMorgan forecast for six cuts by the end of 2026 is reasonable, assuming a neutral level for the fed funds rate is about 3%.

“It’s possible if the economy is weaker and recession risk higher and concerns about Fed independence greater that we get something a little lower than that, 2.5% to 3%,” Zandi said.

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The federal funds rate currently sits at 4.25%-4.50%, meaning a reduction of that magnitude would require a drastic move that goes well beyond the Fed’s typical increments of a quarter point at a time (though it last cut by half a point in September).

It’s so extreme, Wall Street doubts it would actually happen, as it would trigger immense turmoil in financial markets and the economy.

“I don’t think this needs to be taken too seriously, because it’s so ludicrous, and in some ways cutting rates too low, too prematurely, too early would do exactly what you don’t want to happen,” Jeffrey Roach, chief economist at LPL Financial, told Fortune.

That’s because long-term Treasury yields would spike as bond investors price in higher expectations for inflation that a 1% rate would stoke, raising borrowing costs for consumers and businesses.

In addition, a rate that low is usually associated with an economic emergency like the COVID-19 pandemic or the Great Financial Crisis.

So 1% may actually shock businesses into wondering if another calamity is lurking around the corner, prompting them to hunker down and wait rather than expand, Roach warned.

“As a big business owner looking at rates at 1% or 2%, I’m definitely saying, ‘what do you know that I don’t?’” he said. “Hence I’m not going to respond by increasing capex and increasing I operations to the company. I’m going to be even more concerned with what that signals.”

A White House spokesman pointed to Trump’s previous comments that the Fed always can and should raise rates again if inflation spikes after cutting them.

For his part, Roach thinks there’s probably room for rates to eventually drop to about 3.5% by the end of 2026, if inflation stays under control, and said Powell didn’t raise rates soon enough when inflation was surged after the pandemic.

Similarly, Infrastructure Capital Advisors CEO Jay Hatfield accused Powell of gross incompetence by being too late to raise rates but also blasted the idea of the Fed slashing rates to 1%.

Treasury yields would initially drop in the immediate aftermath of a cut to 1%. But once inflation indicators start pointing higher, the fed funds rate would go back up to 4% to shrink the money supply, sending the 10-year yield to about 5%.

After a mini-recession or a big pullback, the yield would end up around 3.75%. “So it’s horrible economic policy to do that,” he told Fortune.

A fed funds rate around 2.75%-3% wouldn’t stoke inflation or send the economy into a downturn, but keeping rates where they are now would trigger a recession, Hatfield added. A 1% rate, however, would require a massive expansion in the money supply.

“It’s absolutely a ridiculous idea and will cause double-digit inflation,” he warned.