Jerome Powell recently said that the effects of the thightening are yet to be seen. This occurs because monetary policy works with a lag, due to sticky rates and wages. He said that they can be 'more comforteble' in the coming months, indicating less frequent hikes. As for rate cuts, he does not expect any this year, and perhaps some next year.
Even though the increase in PCE, Fed's preferred measure of inflation was 3.0% in July, Core CPI increased 4.8% from last year, way above the 2% target. Core CPI is a measure of inflation that does not take into account volatile food and energy prices. This means there is still some ground to be covered in terms of inflation, as Core CPI seems to be a better gauge of the long term inflation trend.
Also, the labor market is still adding jobs, and the unemployment rate is at an all time low, this also indicates inflation will be resilient, as the higher bargaining power arising from low unemployment indicates more wage growth.
Considering a high Core Inflation, and a tight labor market, and the lag with which monetary policy works, the picture is far from clear, the August data will provide us with a more clear picture. But I believe we have one more rate hike coming this year, probably not in September but one or two meetings later.
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