The minutes of the Fed's July meeting, to be released at 2 p.m. EDT on Wednesday, may provide some clues that the Fed may tighten policy again in September. Since the Fed decided to raise interest rates by 75 basis points at its July meeting, financial markets' bets on a rate hike in September have fluctuated between 50 and 75 basis points, as data show that the US labour market is stronger than expected and inflation is lower than expected.

The upcoming minutes of the meeting may show what data Fed officials need to see to support another "unusually large" rate hike.

Michael Gapen, head of Bank of America Corporation's US Ministry of Economic Affairs, said that if new information appeared in the minutes, it might revolve around the question: will further interest rate increases become smaller, or will they really be raised sharply?

He pointed out that the cost-benefit analysis pointed to a small increase in interest rates, while inflation and employment data were likely to support a 75 basis point increase.

Fed officials who have spoken since the July meeting oppose any idea that austerity policy will be changed in the short term. They have made it clear that curbing the worst inflation in four decades is their top priority.

July employment data released by the Labor Department on Aug. 5 showed that companies added 528000 employees last month, more than twice as many as expected, and the unemployment rate fell to 3.5%, the same as the pre-epidemic low. The data prompted investors to bet on a 75 basis point rate hike in September.

But the department's CPI, released on Aug. 10, showed that CPI rose 8.5 per cent in the year to July, down from 9.1 per cent in the year to June. This has greatly changed investors' bets on raising interest rates, and their bets on raising interest rates by 50 basis points and 75 basis points are now roughly flat.

After raising interest rates in July, the target range of benchmark interest rates is 2.25% to 2.5%, a level that many Fed officials consider to be roughly "neutral" for the economy.

August employment and CPI data will be released before the September meeting and may be crucial to shaping market expectations before raising interest rates.

Since the July meeting, Fed officials have stressed in public comments that they are still a long way from declaring victory against inflation and that the rate hike is likely to continue into next year, after which interest rates will remain high for some time.

Investors, on the other hand, are betting that the Fed will start cutting interest rates in mid-2023.

"We are trying to find clues that Fed officials really think are appropriate in terms of inflation," said Tom Porcelli, chief US economist at RBC Capital Markets. Any information provided in the minutes about "what is an appropriate downward trend in inflation and how long they want to see it last" should be read carefully, he said.