Is that the sound of a furiously backpedalling Federal Reserve? Less than two months ago the Fed was decidedly upbeat. While not quite sounding the all-clear on the US economy, it talked of signs of stabilisation in the housing market and improved readings on inflation. On Wednesday, it had a very different message on those twin threats. Its statement described the adjustment in the housing sector (a risk to economic growth) as "ongoing". And it said recent readings on inflation have been "somewhat elevated".

None of that comes as a massive surprise. The Fed, like other mortals, is subject to the vagaries of economic data. By giving a running commentary on its view of the economic backdrop it risks being proved wrong and having to change its tune if the data move against it (as they have in recent months).

The most recent statement is not a signal to run for shelter. The stock market, at least, responded with joy to the Fed's apparent removal of its tightening bias. "Future policy adjustments" rather than "additional firming" will now depend on the incoming data. That opens the way to quick rate cuts if economic growth falters further in the face of continued housing weakness.

But such excitement relies on inflation also behaving itself. The real danger, as the Fed highlights, is that it "fails to moderate as expected". That could leave the central bank caught between slowing growth and stubbornly high inflation. The core personal consumption expenditures deflator (the Fed's preferred measure) has, after all, hovered above Ben Bernanke's 1-2 per cent comfort zone for a number of years. The Fed might have paved the way for a rate cut. But at the same time there is a risk that its room for manoeuvre is being seriously squeezed.