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Minutes from the Federal Reserve’s July meeting released on Wednesday suggest the central bank will continue to raise interest rates until it sees more evidence that it has cracked down on inflation.

The minutes show there have been signs of a slowing economy and some improvement in inflation, but policymakers expect a 50 basis point hike when the Fed meets in September after two consecutive hikes of 75 basic points in the last two months.

“Nearly all respondents to the desk survey expected a 75 basis point increase in the target range at the current meeting, with most expecting a 50 basis point increase in September,” according to the minutes.

“In their discussion of current economic conditions, participants noted that recent indicators of spending and output had softened,” the minutes said. “However, job gains had been robust in recent months and the unemployment rate had remained low. Inflation remained high, reflecting pandemic-related supply-demand imbalances, higher food and energy prices, and broader price pressures.”

“Participants noted that it would likely take some time for inflation to come down to the committee’s target” of an annual inflation target of 2%. “Participants acknowledged that policy consolidation could slow the pace of economic growth, but saw a return to 2% inflation as critical to achieving maximum employment on a sustained basis.”

The release largely followed market expectations, but the Dow Jones Industrial Average fell about 50 points as traders digested the news. Stocks had been on a summer rally of sorts as better-than-expected inflation news came in recently, but that too was tempered by mixed earnings reports.

The Fed is following a path of tighter monetary policy aimed at controlling inflation, which is now running at an annual rate of 8.5%. To that end, the central bank is raising interest rates to raise borrowing costs for everything from business loans to mortgages and credit cards.

There is evidence that it is working, with the housing sector just one of many that have cooled in recent months. On Monday, the National Association of Home Builders said the housing market was in “a recession.”

Economic output has slowed, with the country’s gross domestic product contracting in the first and second quarters. But other data, particularly job growth, consumer spending and industrial production, have pointed to continued growth that is slower but not slowing.

The Fed is trying to get inflation back into the 2% annual range, but that could prove difficult. While many of the drivers of current inflation are related to the pandemic, others, such as a low labor force participation rate and disruptions in global energy markets, relate to demographic and geopolitical tensions that could be more durable.

“Two percent was a lofty goal when we were at half a percent or 1 percent,” says Wayne Wicker, chief investment officer at Mission Square Retirement. “I think it’s unrealistic to think we’re going to get back to 2% anytime soon.”

Part of the dilemma facing the Fed and economists in general is that predictions about the economy’s behavior have proven wrong as the nation still recovers from the effects of the coronavirus. Some of these effects, such as the prevalence of prolonged COVID and extraordinary levels of government stimulus, have disrupted the traditional norms of how consumers behave.

“There is confusion in the data reflecting the impact of last year’s consumer spending binge on goods and the normalization of the economy as the daily lives of most Americans return to something that looks more like pre-pandemic normal,” says Plante Moran Financial Advisors. Chief Investment Officer Jim Baird.

“Inflation remains the biggest near-term threat to the economy, and taming this beast remains the most critical priority for the Fed,” adds Baird. “The bottom line? Against a backdrop of a marked economic slowdown and an increased risk of recession, better-than-expected retail sales are a sign that the consumer sector is not yet dead. Growth has slowed and risks have clearly increased, but a near-term recession should not be considered a foregone conclusion.”