“The press conference was destined to be a challenging affair,” writes Feroli. “The marginal news on growth, inflation and trade policy has all been favorable since June and yet Federal Reserve Chairman Jerome Powell had to defend the decision to cut rates now instead of June.

”In prepared remarks Powell indicated that information on global growth, trade policy uncertainty and muted inflation developments all motivated the decision to cut rates.

But market participants honed in on an unprepared remark in which Powell characterized the move as a “mid-cycle adjustment to policy” in contrast to “the beginning of a lengthy cutting cycle.”

He later refined this hawkish comment a bit by saying that it doesn’t necessarily mean “it’s just one” cut. The “the now-famous remark” on mid-cycle adjustment to policy was in response to the first question, which related to what the Fed would need to see to cut rates again.

“While Powell’s presser stole the show, the post-meeting statement had some notable changes as well,” writes Feroli.

In June, the Fed statement vowed to “closely monitor” developments. In the July meeting, it dialed the alert state down a level by dropping the word “closely.” Feroli also notes the Fed added a “curious” phrase:

“As the Committee contemplates the future path of the target range of the federal funds rate…”

“It’s hard to know exactly how to interpret this, but it does sound like they are emphasizing there is no predetermined path for the funds rate,” writes Feroli. “The statement still has an easing bias, but does not guarantee future action.”

J.P. Morgan research analysts are looking for another cut in September.

Since the last FOMC meeting in June, economic data have generally been better than expected while uncertainties have not convincingly increased.

Asked how data informed and will inform Fed thinking, Powell said: “Going forward… we’ll be monitoring the evolution of trade uncertainty, of global growth, and of low inflation. And we’ll also be monitoring the performance of the U.S. economy.”

“Domestic economic performance did not loom large in today’s decision, but we believe it will be more important in future decisions,” writes Feroli.

As expected, the Committee ended balance sheet normalization—the runoff of the Fed’s $3.8 trillion asset portfolio—six weeks earlier than scheduled.

“We suspect there are many on the FOMC who did not want to alter the plan to end balance sheet normalization in September, but the leadership prevailed,” writes Feroli.

In a surprise move, both the mildly hawkish Kansas City Fed President Esther George and Boston Fed President Eric Rosengren dissented for no change. J.P. Morgan research analysts thought only George would dissent.

Quarles and Rosengren may each retain some reservations about easing.

“Rosengren is one of the thought leaders on the Committee,” writes Feroli. “He had an important role in the genesis of the current framework review and has had prescient policy calls in the past.”

Rosengren dissented for more aggressively dovish policy in late 2007. In late 2016, he argued for the Fed to hasten policy normalization, a view picked up by the rest of the Committee in March 2017.