The Federal Reserve is expected to hold rates steady at its July meeting, but officials have not written off the possibility of a move soon after. Cooler inflation data has raised hopes for a pause, yet policymakers remain cautious about declaring victory.

Recent reports show consumer prices rising at a slower pace, but core inflation remains above the Federal Reserve's 2% target. Officials have signaled that one or two more rate hikes could be appropriate this year if price pressures persist.

Markets are pricing in a July pause, with a September increase seen as a live option. The decision will hinge on incoming employment and inflation figures, which could alter the trajectory.

Investors are watching for clues from Fed Chair Jerome Powell's post-meeting press conference. Any hint of a more hawkish stance could roil financial markets, while a dovish tone may bolster risk assets.