A promising inflation print on the morning of the latest policy announcement from the Federal Reserve has economists feeling optimistic about the central bank’s statement, and Fed Chair Jerome Powell’s press conference may lean more dovish than initially expected.

The Consumer Price Index (CPI) for May showed the lowest yearly increase for consumer prices since July 2022. Across the board, the print showed slower inflation measures than economists had expected.

Given the “magnitude” of these surprises, JPMorgan chief US economist Michael Feroli believes the data could shift how the “dot plot,” which maps out policymakers’ expectations for where interest rates could be headed in the future, comes in at 2 p.m. ET.

“We had thought it was a close call between the median dot showing one or two eases this year,” Feroli wrote in a note to clients. “If participants actively update their dots, as they are allowed to, this should increase the odds of a two-cut median dot.”

Feroli added that the inflation data will likely push the Fed to remove the sentence from its May statement that said, “In recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective.”

While Powell may not directly mention it, other economists have reasoned that, given Wednesday’s positive inflation data and the recent spike in the unemployment rate, the Fed should be close to cutting interest rates to ensure minimal damage to the labor market.

“The unemployment rate has increased 0.6 [percentage points] from its low to 4.0%, hitting the March [summary of economist projections] estimate two quarters ahead of schedule and core inflation has eased,” Renaissance Macro head of economics Neil Dutta wrote in a note on Wednesday. “A rough rule of thumb would be to assume 0.1% on core PCE at the end of the month.

He added, “It does not take a rocket scientist to figure out what needs to be done. It is time to begin recalibrating monetary policy.”