Caught between muted inflation and the prospect of a trade war, the Federal Reserve has a fine line to walk at its meeting next week. Wall Street is growing more certain that the central bank will implement one, if not more, interest rate cuts this year.

The Consumer Price Index ticked up just 0.1 percent in May, following a 0.3 percent increase the previous month. In addition to Wednesday’s inflation measures, the Department of Labor said Thursday that import prices for May fell by 0.3 percent, a steeper drop than expected. This weaker-than-expected inflation data gives the Fed a more compelling case for a rate cut, adding to the growing amount of data that indicates a softening economy.

“This adds to the narrative that the Fed is likely to begin cutting rates later this year against the backdrop of slowing economic growth,” said Emily Roland, head of capital markets research at John Hancock Investment Management.

“The reason the CPI data matters is it reinforces in the Fed’s mind what’s been a troubling trend of slowing inflation that’s less than their target,” said Joseph LaVorgna, managing director and chief economist of the Americas at Natixis.

If the Fed does pivot toward a more dovish stance, as many expect, more accommodative monetary policy will be driven by a combination of economic metrics signaling slower growth and worry about the destabilizing effect of a potential trade war with China.

“The median dot plot from the March meeting showed one rate hike for next year, but the bond market is now pricing in three rate cuts,” Roland said.

For an institution that prizes stability and balance, this turnaround has come at a surprising pace. “It’s been a remarkable shift in the posture of the Fed in just the past few weeks,” said Dan North, chief economist at Euler Hermes North America.

“The numbers came in a little bit lighter than expected, which means the Fed does have some more room to consider a cut,” said Brad McMillan, chief investment officer at Commonwealth Financial Network.

But that move would be unlikely to come right away. “The Fed has always said they are data dependent — and the current data suggests they shouldn’t do anything,” McMillan said.

“My guess is they’ll hold off a little bit longer to get some clarity on maybe how the next payroll numbers are showing up, GDP revisions, maybe some progress on G-20 with trade,” LaVorgna said. “The Fed has a lot of reasons to cut rates. It’s not just the trade issues.”

Among economists, though, there is a growing expectation that the language used by Fed Chairman Jerome Powell will indicate that the prospect of a rate cut in July is on the table. Wall Street always parses the minutiae of Fed remarks, but reading tea leaves this time around is a particularly high-stakes activity.

“At this point the Fed is in a sit-tight posture. They’re waiting to see what happens. I’m going to be looking for any sign that they’re shifting from watchful waiting to, ‘We have to act,’” McMillan said. “They’re very aware of what could go wrong.”

The biggest unknown is the outcome of a potential China trade deal. If the White House and Beijing fail to meet at the G-20 summit later this month and forge a deal that will avert tariffs being levied on the entirety of Chinese goods entering the U.S., the case for faster monetary easing grows stronger.

“It all boils down to whether the Fed is really concerned about the economic danger of the trade war,” McMillan said.

The Fed’s other challenge is one of optics, economists say. President Donald Trump has frequently criticized his appointee to lead the central bank and called for lower interest rates.

The appearance that the central bank is acting on Trump’s bidding would hurt the Fed’s reputation and would be likely to spook investors. “If they continue to ease and it looks like they’re doing it at the president’s direction, that does considerable damage to market confidence,” McMillan said.

“I actually do think that’s part of the decision,” North said. “But we’re also looking at weak data,” he said.

If indications of a slowdown continue to accumulate in prices, consumption and job growth metrics, it increases the likelihood that Trump will eventually get his rate cut, especially if the trade standoff is not resolved.

“It appears that there is pressure to have a ‘Powell put’ on the economy,” North said. ”But the fundamentals justify it, as well. It’s not just what Trump is saying.”