The US Federal Reserve raised interest rates by 25 basis points on Wednesday, taking benchmark borrowing costs to their highest level in more than 22 years, a hike which economists increasingly think will be their last in the current cycle.
James Knightley at ING Economics said: "The Fed unanimously hiked its policy interest rate range 25bp as widely expected with the statement retaining the phrasing that further policy firming 'may be appropriate'.
"With two months' worth of data to come before the next FOMC meeting, we suspect evidence of slowing inflation and softer activity won't make that necessary," he thinks.
The CME FedWatch tool sees an 80% probability that interest rates will be left unchanged at the Fed’s September meeting.
Wednesday's increase followed a brief reprieve at the previous meeting in June, when the FOMC held the benchmark rate steady.
"The committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments," a statement from the Federal Reserve said.
The Fed's chair, Jerome Powell, was coy when it came to future policy. He did not commit to another hold in September, but did not really signal another hike either, as he affirmed a "data-dependent" approach to future decisions.
Paul Ashworth at Capital Economics noted the statement “was almost identical to the one issued last month, with the Fed keeping the tightening bias language that at future meetings, officials will consider 'the extent of additional policy firming that may be appropriate'.
"The only notable change is that, in an upgrade to the assessment, economic growth is now described as 'moderate' rather than 'modest'."