Persistent inflation pressures above the Fed’s 2% target, driven by May 2026 CPI rising 0.5% month-over-month and core readings near 2.9% year-over-year amid a resilient labor market with unemployment steady at 4.3%, have anchored trader expectations against near-term policy easing while limiting the case for hikes. The federal funds rate target range remains 3.50%-3.75%, with futures markets and the March 2026 dot plot reflecting a modal path of steady rates or modest easing later, now pushed into 2027 by most forecasters. Geopolitical tensions contributing to energy and shelter costs, combined with the June 17 FOMC meeting’s likely hold and potential removal of easing bias language under new Chair Kevin Warsh, represent the immediate catalysts shaping the 61.5% market-implied probability of no rate hike in 2026.