The prospect of a deficit reduction package doesn't necessarily mean interest rates will decline dramatically unless the economy moves into a full-blown recession.

In a recession, demand for credit falls and so do interest rates. But a struggling economy, able to grow just 1 percent to 2 percent a year, is probably the worst scenario for the Treasury, one that means U.S. borrowing needs will continue to press at rates.

Slow growth reduces federal tax receipts. It also would make the U.S. economy look weaker compared with economies abroad and would create the conditions for a softer dollar, which could lead foreign lenders to deny capital.

Finally, slow growth could increase the money the government needs to pay for such things as unemployment and welfare.

No matter what the economy does, the Treasury will still have to finance sizable deficits, which means that the amount of Treasury financing will keep growing.

In fiscal 1985, the Treasury raised $172.7 billion in new money by selling securities. By comparison, in the first half of this fiscal year, it raised $103.9 billion. By the end of the year, that should be up to $184 billion. Next year, it is estimated that the Treasury will have to raise $70 billion just for the Resolution Funding Corp., which is coordinating the savings and loan rescue.

So even if the deficit reduction package comes through, the Treasury's financing needs will be quite formidable.

Given the worldwide demand for capital, with the huge volume of Treasury financings on tap, it will take a recession, with its reduced demand for credit by consumers and business, to push interest rates down significantly.