Persistent inflation above the Fed’s 2% target, fueled by Middle East conflict effects and a blowout May jobs report showing unemployment steady near 4.3%, has shifted trader sentiment toward the possibility of at least one 25-basis-point hike by late 2026. With the federal funds target range holding at 3.50-3.75%, futures markets now embed a modest upward path to around 3.8% by year-end while a Reuters poll of economists sees roughly 70% odds of no change through December. This balance reflects uncertainty over whether recent price pressures prove transitory versus the need for further tightening. The June 16-17 FOMC meeting, September data releases, and updated dot plot will provide key signals that could tip implied probabilities decisively either way.