Federal Reserve Chair Jay Powell reinforced a commitment to being patient on Wednesday despite splintering views inside the central bank, as officials held interest rates steady in the wake of resurgent economic growth. In a press conference, Powell said the current state of the US economy—with inflation above target and unemployment low—calls for a “modestly restrictive” policy stance. The personal consumption expenditures (PCE) price index was up 2.6% year-over-year in June, higher than 2.4% in May, the Commerce Department reported on Thursday. Two members of the policy-setting committee, Governors Christopher Waller and Michelle Bowman, favored a quarter-point rate cut—representing dissenting votes that illustrate an emerging divide over monetary policy. Some officials have argued in favor of lowering rates sooner rather than later, citing milder inflationary pressure and risks to the labor market.

The rate call came just hours after a GDP report that showed robust consumer spending helped the economy to 3% annualized growth in the second quarter, the Commerce Department said in its initial estimate. President Donald Trump said on Wednesday a tariff deadline on Friday “will not be extended,” raising the stakes for trade negotiations that are down to the wire. In addition to the trade banter, investors will be parsing the July jobs report on Friday to gauge whether hiring has kept pace amid an uncertain outlook.

PGIM’s Tom Porcelli, Chief US Economist for fixed income, shares his takeaways from the Fed meeting and why softening in the labor market could justify cutting rates twice before the end of the year.