Tuesday’s encouraging inflation report for June likely means Federal Reserve officials can hold interest rates at their current level when they meet later this month to discuss monetary policy. But what’s far less certain is how they will respond if inflation springs back up, a likely outcome since gas prices are moving higher this month.

For now, the June report is “good news for the nation, for the Federal Reserve and for many middle-income and moderate-income Americans who were desperate for some relief on inflation,” said Heather Long, chief economist at Navy Federal Credit Union.

“The overall picture is encouraging. But it’s too uncertain right now to know how the renewed conflict in Iran will impact prices in July. The Fed may have to hike interest rates by December, but for now, the best course of action is to wait and see,” Long wrote in a Tuesday note.

Seema Shah, chief global strategist at Principal Asset Management, said: “Today’s data all but rules out a July rate hike.”

“Beyond that, the outlook is less certain. Resurgent energy prices, growing focus on the inflationary effects of the AI capex boom, and Warsh’s re-emphasized intolerance for elevated inflation suggest the risk of a rate hike this year is very much alive,” she wrote in Tuesday commentary.

Jeffrey Roach, chief economist at LPL Financial, said the big risk is still geopolitical, and that “a positive resolution with Iran before the end of the summer is becoming increasingly important.”

“After today’s benign core inflation release, it appears less likely that the FOMC will raise rates over the next few meetings. However, we may still be at an inflection point, given the risk that the energy shock could spill over into other categories of consumer prices,” he wrote in comments distributed Tuesday.