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The Federal Open Market Committee (FOMC) wrapped up its July meeting yesterday afternoon, during which the FOMC elected to hike the federal funds rate target within the range of 5.25 to 5.50 percent.

The FOMC elected to raise interest rates but refrained from providing any definitive indications of an end to the current tightening cycle. The August break between meetings will be critical for confirming a consistent erosion in inflation and will offer indications of how long the committee chooses to maintain its present terminal rate.

“The decision to raise interest rates suggests the committee is still wary of declaring mission accomplished on inflation, despite recent economic data indicating long-awaited improvements,” said NAFCU Economist Noah Yosif. “By assuming a cautious approach in its forward guidance, the committee reaffirmed its belief that the economy remains capable of withstanding pressure from rising interest rates, and its preference to leave the door open for ‘additional policy firming’ if the rise in real rates is insufficient to tackle inflation.”

“NAFCU anticipates the August break between meetings will be critical for confirming a consistent erosion in inflation and will offer indications of how long the committee chooses to maintain its present terminal rate,” Yosif concluded.

More insights can be found in the new Macro Data Flash report. The FOMC will next meet Sept. 19-20.