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Like Ben Bernanke and Janet Yellen before him, Federal Reserve Chairman Jerome Powell may be worried that the central bank’s use of extreme policy during the financial crisis left him with a relatively small amount of fire power to head off the next economic decline.

That may make the idea of a so-called insurance rate cut later this month, an attractive option for the Fed chair, who looks determined to cut interest rates even as the domestic economy appears to be showing some signs of strength.

“It’s pretty incredible how strong the data has been. We added 224,000 jobs. We had an extraordinarily strong retail sales report; a 0.3% gain in core CPI month over month. Manufacturing surveys are rebounding. Jobless claims are hovering at cycle lows,” said Michelle Meyer, Bank of America head of U.S. economics. “The set of data heading into the next FOMC meeting is really quite robust.”

Yet, Meyer, like many Wall Street economists, expects Powell’s Fed on July 31 to pull the trigger on a quarter point rate cut, the first since 2008, and possibly the first of several. Traders increased their bets on Thursday that the Fed could cut even deeper later this month.

The futures market is pricing in 100% odds of a quarter-point cut at the Fed’s next meeting and two more this year. Hill said the market priced in even higher odds that the Fed would make a 50 basis point cut in July, following Williams’ comment.

Specifically, the odds of a half-percentage-point cut by the Fed increased to 59% on Thursday following the Williams talk, up from about 35% earlier in the day, according to the CME’s Fedwatch tool. After Clarida spoke, the odds jumped to 69%.

Joseph LaVorgna, Natixis chief economist Americas, said Williams comments make it seem as though the Fed would be willing to cut by a half percentage point at its July meeting.

“In a weird way the strong data is going to make them go more. The strong data gives them an out. They can cut 50 [basis points] in July. At that point, they can go back to being data dependent. By going back to being data dependent, they actually buy themselves more optionality. They can go back to watching data and they can get more easing into the system,” said LaVorgna. “It’s a way to get future easing out into the market and to do it in a way that’s not destabilizing.”

“I think the reason the [U.S.] data looks so decent is because the Fed is going to cut. If the Fed had not pirouetted and pivoted, we would not have seen the improvement,” said Diane Swonk, chief economist at Grant Thornton. Now, the Fed has to follow through with a rate cut after its strong signals in order to maintain its credibility.

“You’ve got decelerating growth. You’ve got warnings from abroad, and in both September of 1998 and September of 2007, the Fed said let’s cut rates a little bit and we’ll think of them as insurance cuts,” said Luke Tilley, chief economist at Wilmington Trust. In 2007, the economy was heading into the Great Recession and that plan did not work, but it did in 1998.

While the consumer-related data has been showing improvement, much of the U.S. manufacturing data has been weak, along with the rest of the world.

“If the problem with the economy is tariffs, and they keep going up, the Fed does not have the right medicine at their disposal,” said Tilley.

“What we really need to see is an improvement in the U.S. and Chinese trade relationship. If we really went to a bad place, I don’t think there’s much the Fed could do to fix the economy if we get more tariffs on more Chinese goods,” said Tilley.