As widely expected, the FOMC raised the target range for the federal funds rate to 5.25-5.50%. The decision was unanimous.  

During the press conference, Powell kept his options open for the September meeting and stressed the data-dependence of that decision. This has increased the upside risk to our forecast that the Fed is now done hiking for the year.  

However, if core inflation continues to decline, there is no rush for the Fed to hike in September. By November, we expect the economy to have deteriorated, preventing further hikes. At the same time, we expect that persistent inflation will keep the Fed from cutting rates this year.