Persistent inflation above the Fed’s 2% target, with July 2026 CPI at 3.4% year-over-year and core at 2.5%, continues to anchor trader expectations for the federal funds rate range of 3.50%-3.75%. Energy supply shocks tied to the U.S.-Iran conflict have kept price pressures elevated, prompting a hawkish shift evident in July FOMC minutes where several officials favored a 25-basis-point hike and three dissented from the hold decision. Recent softer jobs data has tempered near-term hike odds for the September 15-16 meeting, though Reuters economist polls show a strong consensus for no policy change through year-end. Market-implied odds via FedWatch tools reflect ongoing uncertainty around the September dot plot and subsequent data releases on inflation and employment.