“This change was not driven by a major shift in the baseline outlook for the economy,” Powell said. “We view the baseline as still solid.”

Communication Challenge
The Fed could still have made life difficult for itself later this year if its own baseline forecast proves correct and additional rate increases prove warranted.

Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., who still predicts two rate hikes this year, said the overall dovish message “is almost encouraging the market to keep a rate cut priced in. It’s going to be tricky messaging,” he added, if the committee determines hikes are needed later in 2019.

Confusion could come soon, according to Wrightson ICAP LLC chief economist Lou Crandall, if Fed officials project any further rate increases when they next submit economic forecasts. “The markets will feel misled if the March dot plot is still upwardly sloping,” he said.

To be fair, Powell tried to justify the shift by sketching out risks to the U.S. economy in starker terms than he had previously, highlighting the faltering international environment.

Global Slowdown
“The narrative of slowing global growth continues,” Powell said. “We’ve seen that both in China and in western Europe.”

Powell also drew fresh attention to concerns over “muted inflation pressures.” Inflation struggled for many years to creep back up to the Fed’s 2 percent target, reaching it briefly in mid-2018. But officials sound less confident now that it won’t slip meaningfully below their target again.

Still, Wednesday’s performance will likely raise more questions about Powell’s penchant for delivering a message well outside investor expectations. The chairman, who took over from Janet Yellen in February, has repeatedly whipsawed markets.

He first roiled markets in October with a comment on the so-called neutral rate that was construed as hawkish, then walked it back in a subsequent speech. He and other Fed officials again were forced to pull back on the message that emerged from the December meeting, ramping up their references to being “patient.”

With markets mostly calm, few expected Powell to outdo that message with Wednesday’s retreat.