From the Wall Street Journal:

The Federal Reserve is almost certain to leave interest rates unchanged when it meets next week, and it currently doesn't appear to see a compelling case for raising rates before the fall, unless the inflation outlook deteriorates considerably

Futures markets are betting that the central bank is likely to raise its interest-rate target from its current 2% in August, because of mounting inflation worries. But that may be an overly aggressive wager.

An August rate hike can't be ruled out. Between now and then, a raft of economic data, including two employment reports and several gauges of inflation, will be released. If the overall economy and the financial system show signs of rapid improvement or the inflation news worsens significantly, the Fed may decide to start reversing some of the rate cuts that began last September.

But for now, Fed officials want to both demonstrate their vigilance against inflation risks, particularly from soaring energy prices and the weak dollar, while also giving the economy time to recover from the trouble in the housing, labor and financial markets.