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The latest batch of inflation data offered the Fed a brightly illuminated, fog-free runway for an ambitious soft landing.

When enough time goes by, economic data that once constrained policymakers now gives them leeway. If central bankers were on the lookout for "more good data" before they hit the stimulus switch, they likely found it on Wednesday as the reading for CPI broke below 3%, the lowest annual figure since spring 2021.

"We see the signal from this report as reinforcing the Fed's bias to cut, and we expect the first cut to come in September," wrote Bank of America Global Research economists in a note on Wednesday.

But even as the encouraging reading bolstered the case for what seems like an inevitable cut , it also managed to soften expectations for how deep the Fed will cut on its first go. The debate over lowering interest rates quickly evolved from “if” to “how many?” and “by how much?”

Market bets Wednesday afternoon placed the likelihood of a 50 basis point decrease at about 37%, down from 53% on Tuesday and a good tick lower than last week’s 69%, according to the CME FedWatch tool.

But that change might have more to do with last week’s market panic and massive sell-off than wavering confidence over the Fed’s ability to tamp down inflation. After all, the tremors from last Monday’s financial quake prompted some observers to call for an emergency rate cut outside of the Fed’s scheduled policy meetings.

It’s also a testament to how fickle the market can be. Stock indexes have won back roughly half the losses since mid-July's peak. Last week, the sky was falling. This week, we’re back to nitpicking over Goldilocks inflation readings.

While the market embraces the chance of lower rates as a near certainty, the Fed will have other factors to consider, as Chair Jerome Powell likes to remind us. Three important datasets will arrive as waypoints before we get to the Fed’s mid-September policy meeting.

First is the core PCE price index, the Fed’s favored inflation gauge, on Aug. 30. Then comes the August jobs report on Sept. 6, and finally, a last, pre-meeting snapshot of pricing pressures in the form of another CPI report on Sept. 11.

Even if none of the readings offer a surprise twist, the Fed's newfound attention for both sides of its mandate complicates the policy response.

Inflation's acceleration and stubborn stickiness led the central bank to pursue a historic tightening campaign. But the risks of a deteriorating labor market and of a recession will likely dictate how aggressively the Fed discharges the easing .

Officials now have more freedom to act. But that doesn't mean they know what to do.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban .