The Federal Reserve will publish meetings of its July policy decision Wednesday as analysts and investors look for clues as to the central bank’s next move on interest rates and their forecast for a so-called ‘soft landing’ for the world’s biggest economy. 

The Fed lifted its benchmark lending rate by a quarter of a percent point last month, taking it to a twenty-two year high of between 5.25% and 5.5%, while repeating its view that further increases will likely be needed in order to bring inflation back to the central bank’s 2% target.

Fed Chairman Jerome Powell, however, suggested that the central bank may be at or near the end of what has been the most aggressive tightening cycle in four decades.

“We’ve raised the federal-funds rate now by 525 basis points since March 2022,” Fed Chairman Jerome Powell told reporters in Washington yesterday. “Monetary policy, we believe, is restrictive and is putting downward pressure on economic activity and inflation.”

Since then inflation data has been mixed, with a softer-than-expected headline reading of 3.2% for July paired against quickening factory gate price increases and a surge in July retail sales. 

The labor market also remains historically tight, with a headline unemployment rate of around 3.5% — the lowest in five decades — and average hourly earnings growing at around 5.1%.

The broader economy, meanwhile, is growing at a 5% clip, according to the Atlanta Fed’s GDPNow forecasting tool, following on from its 2.4% advance over the three months ending in June.

Rate traders see little chance of a follow-on rate hike from the Fed in September, with the CME Group’s FedWatch tool indicating a 90.5% chance that rates will remain steady, with bets on a final 2023 increase pegged at 29.5% for November and 27.5% for December.