The Federal Reserve has now lowered its target interest rate for overnight loans between banks twice since the end of July. The central bank's economic projections and Chairman Jerome Powell's post-meeting news conference suggest policy makers aren't quite ready to cut rates a third time, and will need to see either weaker economic data or an intensification of the U.S-China trade war to deliver that cut.

As noted in their post-meeting statement, policy makers have a generally upbeat view of the economy. While they identified business investment and exports as weak spots, household spending and the labor market are strong. Importantly, the Fed does not seem rattled by the slowdown in job growth. If it was less optimistic about the job market, another rate cut would likely be a virtual certainty already.

I suspect policy makers see slower job growth as more consistent with a stable unemployment rate, minimizing the chance that their dovish tilt leads to an overheated economy. It's an economy that is expected to remain in "a good place" as a result of the Fed's actions.

Still, the two 25 basis points of rate cuts were driven less by the economic outlook and more by the risks to the outlook posed by trade policy uncertainty. The Fed's statement said that those uncertainties remain while retaining the language that it will act as appropriate to sustain the expansion. This clearly signaled the Fed's willingness to cut rates again.

But the willingness to cut rates is not the same thing as cutting rates. Policy makers have already reacted to trade policy uncertainty but don't yet know whether they have done enough or too much. Powell said policy should not overreact to the uncertainty, but neither should it underreact. Interestingly, this pretty much describes the split on the Fed. According to the so-called dot-plot of rate forecasts for this year, five policy makers think the Fed has already overreacted while seven think it has underreacted and needs to lower rates further. The remaining five think policy is just right.

Which group gets the upper hand going forward depends on some material change in the actual data or the risks to the outlook. The status quo will likely lead the Fed to hold rates steady at the next policy meeting at the end of October with the risk weighted toward another cut. A softening in the data or an intensification of trade tensions will prompt a rate reduction.

Another scenario is that the data improve in the months ahead. This week's data flow fits with such a scenario. Despite concerns about the manufacturing sector, industrial production rose 0.6% in August. And overall weakness in manufacturing falls well short of the more substantial yet still non-recessionary declines in 2015-2016. Housing starts, traditionally a very good leading indicator, have fully recovered.

After the July Fed meeting, it looked obvious that another rate cut was at hand. This time, the case for a reduction at the next meeting doesn't look so strong. Powell artfully made no policy commitments and re-emphasized that the Fed is data-dependent. We should take him at his word and conclude that the evolution of the data and the risks will drive the next policy decision. The status quo is not enough to guarantee another rate cut.

Tim Duy is a professor of practice and senior director of the Oregon Economic Forum at the University of Oregon and the author of “Tim Duy's Fed Watch.”