Federal Reserve Chair Jerome Powell said Monday that the recent half percentage point interest rate cut shouldn’t be interpreted as a sign that future moves will be as aggressive, in fact indicating the next moves will be smaller.

The central bank chief asserted during a speech in Nashville, Tennessee, that he and his colleagues will seek to balance bringing down inflation with supporting the labor market and let the data guide future moves.

“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course,” he told the National Association for Business Economics in prepared remarks. “The risks are two-sided, and we will continue to make our decisions meeting by meeting.”

Powell did indicate that if the economic data remains consistent, there are likely two more rate cuts coming this year but in smaller, quarter percentage point, increments. That stands in contrast with market expectations for more aggressive easing.

“This is not a committee that feels like it’s in a hurry to cut rates quickly,” he said during a Q&A period following his speech with Morgan Stanley economist Ellen Zentner. “If the economy performs as expected, that would mean two more rate cuts this year, a total of 50 [basis points] more.”

Stocks fell as Powell spoke, with the Dow Jones Industrial Average off more than 150 points. Treasury yields moved higher, with the benchmark 10-year Treasury note most recently yielding close to 3.8%, up nearly 5 basis points on the session.

The remarks come less than two weeks after the rate-setting Federal Open Market Committee approved the half percentage point, or 50 basis points, reduction in the Fed’s key overnight borrowing rate. A basis point equals 0.01%.

Though markets had been largely expecting the action, it was unusual in that the Fed historically has only moved in such large increments during events such as the Covid pandemic in 2020 and the global financial crisis in 2008.

The likelihood of another 50 basis points in cuts would be consistent with estimates provided in the FOMC’s “dot plot” indicating individual officials’ assessments of where rates are headed.

Addressing the decision at the Sept. 17-18 meeting, Powell said it reflected policymakers’ belief that it was time for a “recalibration” of policy that better reflected current conditions. Beginning in March 2022, the Fed began fighting surging inflation; policymakers of late have shifted their attention to a labor market that Powell characterized as “solid” though it has “clearly cooled over the last year.”

“That decision reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in an environment of moderate economic growth and inflation moving sustainably down to our objective,” Powell said.

“We do not believe that we need to see further cooling in labor market conditions to achieve 2 percent inflation,” Powell added.

Futures market pricing is indicating that the Fed is more likely to move cautiously at its Nov. 6-7 meeting and approve a quarter-point reduction. However, traders see the December move as a more aggressive half-point cut.

For his part, Powell expressed confidence in economic strength and sees inflation continuing to cool.

Inflation during August was around 2.2% annually, according to the Fed’s preferred personal consumption expenditures price index released Friday. While that is close to the central bank’s 2% goal, core inflation, which excludes gas and groceries, was still running at a 2.7% pace. Policymakers usually consider core inflation as a better guide for longer-run trends being that food and energy prices are more volatile than many other items.

Perhaps the most stubborn area of inflation has been housing-related costs, which rose another 0.5% in August. However, Powell said he believes the data eventually will catch up with easing prices for rent renewals.

“Housing services inflation continues to decline, but sluggishly,” he said. “The growth rate in rents charged to new tenants remains low. As long as that remains the case, housing services inflation will continue to decline. Broader economic conditions also set the table for further disinflation.”