“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.