A key inflation reading Wednesday showed prices moderating across a range of goods and services, possibly taking the urgency out of an imminent interest rate hike.

The consumer price index, part of the Federal Reserve’s inflation dashboard, showed a seasonally adjusted increase of 0.1% during July, according to the Bureau of Labor Statistics. Excluding food and energy, so-called core CPI rose 0.2%.

On an annual basis, the inflation rates were 3.4% and 2.5%.

All of the readings were line with the Dow Jones consensus forecasts.

Though the levels held well above the Fed’s 2% target, the tame monthly readings, coupled with similarly moderate levels in June, indicate that the energy-fueled burst earlier in the year is easing, though prices remain volatile and subject to constantly changing conditions in the Middle East.

Stock market futures rose following the release while Treasury yields were negative across the board. Traders further cut the probability for a September rate hike, lowering the odds to 42%, according to the CME Group’s FedWatch gauge of futures prices.

Energy prices dropped another 1.5% for the month following a 5.7% decrease in June. Still, the sector saw an annual increase of 14.7% following sharp gains in prior months, including a 10.9% surge in March just after the attacks against Iran began.

Both food and shelter saw 0.1% increases in July. Shelter costs had been stubborn and a key contributor toward keeping the inflation rate above 2%. Even with the modest gain, shelter accounted for about two-thirds of the headline increase, the BLS said.

New vehicle prices rose 0.1% while used cars and trucks increased 0.4%. Medical care was up 0.4% and airline fares accelerated by 2.2%.

The Federal Open Market Committee, the central bank’s rate-setting body, does not meet again until September, so it will have an additional month of inflation data to digest before it has to make a decision.

“In-line inflation will keep the ‘no need to hike rates’ narrative that took hold after last week’s jobs report intact,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “There will be another round of inflation data before the September FOMC meeting, so the storyline could still change. But unless those numbers tell a much different story, the Fed will likely still be in a position to leave rates unchanged next month.”

Up until a week or so ago, markets had been pricing in a strong likelihood of a hike at next month’s policy meeting. However, renewed concerns about the labor market following a net job loss in July combined with gyrations in the energy sector have taken the immediacy out of a hike.

At the July meeting, the FOMC voted 9-3 to hold its key interest rate steady, with the dissenters all voicing support for a rate hike. Markets now are pricing a stronger chance for a move in October or December.

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