The US Federal Reserve has backed off from their intentions to continuously raise rates in 2019. While their QT program might not be over, it does appear that economic realities are not as bright as widely believed. Or, why otherwise has the Fed turned so dovish?

The Fed, in its January meeting, did not touch rates, which gave a short-term boost to stock markets. The latest meeting and the subsequent “Fed-speak” leaves a lot of questions, which in and of itself is the norm.

In any case, many members of the policy-setting committee “suggested that it was not yet clear” whether there will need to be “adjustments” to the central bank’s main borrowing rate later in 2019, the minutes say. Several officials argued that more hikes “might prove necessary only if inflation outcomes were higher” than currently projected.

The central bank minutes say that indeed the outlook “had become more uncertain” since December, while nodding to the fact that “financial market volatility had remained elevated over the intermeeting period.” Officials also cited other factors: slower growth, deteriorating consumer and business confidence, trade tensions and the partial government shutdown.

But clearly financial markets were on the top of the mind for Fed officials, with the views of “market participants” garnering several mentions.

“Considerations of [rising] risks drove the committee to emphasize its ‘patient’ mantra with respect to future rate hikes,” said Curt Long, chief economist for the National Association of Federally-Insured Credit Unions. “That is certainly a nod to jittery markets, which seem to have been comforted by the shift in tone from December.”

Most interestingly, perhaps, is the Fed gave indications of concern that financial market participants may have misinterpreted its December communication as a lack of recognition of economic risks, with officials debating whether their aggregated projections of future rate hikes misleadingly suggested that “policy was on a preset course.”