There are still lags to policy transmission that are playing out. The Fed is open to the idea that rate hikes may not be constraining the economy as much as previously thought, due to the remarkable strength in the economy that they are currently seeing. Services and shelter price-setters still have room to push prices higher. The Fed will proceed deliberately on policy, indicating that they are not in a rush to make any drastic changes.
It seems that the Fed is not leaning towards cutting rates at this time. If the recent trend in the data continues, traders may push back the Fed market pricing going into the July meeting. Currently, the odds of a rate cut in September are around 70%, with the first full 25 bps rate cut priced in for November. In total, traders are expecting around 45 bps of rate cuts for the remainder of this year.