The outcome of the Fed’s July meeting seems largely settled: Many officials have said in recent speeches and interviews that they support raising interest rates by a quarter percentage point, to a 22-year high. With inflation broadly slowing in June, the real debate at the July meeting is likely to center on how to get rates up again in September or the fall.

At the June meeting, most officials expected two more rate hikes this year would be necessary if the economy grows modestly and inflationary pressures ease steadily.

Despite good news on Wednesday about cooling inflation, officials remain motivated to raise interest rates further this month, in part because overall hiring and economic activity since May have been stronger than expected. Additionally, some officials would like to see inflation continue to slow before ending its rise.

The core inflation index, which excludes volatile food and energy prices, posted its smallest monthly gain in more than two years in June, rising less than 0.2% from the previous month.

“I would say we’re close, but we have some work to do,” Federal Reserve Vice Chairman Michael Barr said in an interview on Monday.

Speaking in New York late Thursday, Federal Reserve Governor Christopher Waller said he wants to see evidence that the recent slowdown in inflation is not a fluke. He said the recent report "warms my heart, but ... I have to use my head to make policy. I can't do that on one data point."

Fed Chairman Jerome Powell said the decision to keep interest rates steady last month was to give officials more time to study the impact of the Fed’s past actions. Officials also want to understand the economic impact of higher bank funding costs following the collapse of three regional banks earlier this year.

“I remain very concerned about whether inflation will return to target in a sustainable and timely manner,” Dallas Fed President Lorie Logan, who is a voting member of the Federal Open Market Committee this year, said in a recent speech.

Higher rates can slow the economy through financial markets by lowering asset prices and raising borrowing costs. Officials worry that keeping rates steady when investors widely expect a July rate hike will spark a market rally that would ease financial conditions and make it harder to bring down inflation.

Logan said she voted for last month’s pause, even though she favors rate hikes, because officials released a “full set of communications” that strongly indicated further rate hikes were needed. “At this point, the FOMC must follow through on the signal we sent in June,” she said.

Officials will get two more months of employment and inflation data before their September meeting and another month before their November decision.

Hawkish delegates are likely to argue at this month’s meeting that the Fed should be ready to raise rates again in September. Waller said Thursday that he would support a second rate hike in September if inflation does not continue to fall and there are no signs of a significant slowdown in economic activity.

He said a pause in rate hikes might be considered “if the data looks like we’re making progress” and the July and August consumer price index reports are similar to the June readings.