The primary driver of current Fed rate expectations is persistent inflation well above the 2% target, with July PCE at 3.7% amid supply shocks and Middle East-related energy pressures, alongside a resilient labor market and solid GDP growth. The FOMC held the federal funds target range at 3.50–3.75% in its July 29 meeting by a 9–3 vote, with three members dissenting in favor of a 25-basis-point hike, while new Chair Kevin Warsh’s removal of forward guidance and updated projections—showing roughly half of officials favoring at least one increase by year-end—shifted market pricing toward a possible September 16 move. Traders now assign around a 66% implied probability to a hike at the upcoming FOMC meeting, which includes fresh Summary of Economic Projections, versus prior expectations of steady policy. Key near-term catalysts include the August employment report on September 4 and CPI release on September 11, which will shape whether incoming data reinforces or eases the hawkish tilt.