Short and sweet: I told you the Fed is always watching the economy to make sure they stay balanced between the war on inflation and causing too much collateral damage. Today Jay Powell confirmed it.

The Fed will now move “meeting to meeting” when it comes to interest rates, Powell says. The old tightening bias is officially gone. This is a big deal. Normally, we’d have to wait until the next policy statement to get it.

Powell still wants to talk tough. Inflation remains the threat. But he also clearly wants us to know that if anything breaks down in the banks or the federal budget or anywhere else, he and his colleagues are not automatons.

They won’t steer us into an obvious disaster just because they want to look tough on inflation. And they definitely want us to know that they are unwilling to pour accelerant on the economy if anything crucial catches fire. They aren’t stupid. They aren’t blind.

The fact that Powell felt the urge to remind us of this is extraordinary. But I like the rational tone. It lets us watch alongside the Fed and weigh the data reports as they come. If inflation comes in hot, I bet that means a rate hike is ahead. If inflation keeps receding, we might get a pause.

Month by month, the cycle plays out. It makes the data important again. We know that every release matters. Previously, the Fed was so biased toward hell-or-high-water rate hikes that we could practically ignore the numbers and simply brace for the next big tightening move.

As of today, the futures market is making 80% odds on a pause in June. A couple of months ago, it was more like 50-50 that we’d get another hike.

And then, starting in November, the odds shift in favor of an overt rate cut. The market might be wrong. I think it’s either overly optimistic or overly pessimistic, depending on your point of view, but either way, the mood seems a little less than rational.

If the Fed cuts in the next few months, it will be because the economy is crashing, because of the budget ceiling or the banks or whatever else. Full stop. That’s not what investors normally hope to see. No rate cut is worth it.

But a pause? A pause will feel amazing. Suddenly there’s a sense that rates might finally stop going up. This will be as bad as it gets from that point of view. We can plan. Budget. Banks can make money.

That’s the light at the end of the long tunnel back from zero to “normal” interest rates. And that’s what Powell gave us today.