**Persistent inflation pressures and a resilient labor market have shifted trader expectations toward a higher likelihood of steady Fed policy through 2026, supporting the 64.5% market-implied probability of no rate hike.** May 2026 CPI rose to 4.2% year-over-year—its highest since 2023—driven largely by energy costs amid geopolitical supply shocks, with core inflation also edging higher to 2.9%. The unemployment rate held steady at 4.3% following a strong May jobs report, keeping the labor market firm and reducing near-term recession risks. These data points have prompted economists and futures markets to largely price out cuts for the remainder of the year while assigning only a moderate probability to hikes, with the CME FedWatch tool recently showing roughly a 66% chance of at least one 25-basis-point increase by year-end. The FOMC’s March 2026 dot plot still showed a median expectation for one cut by year-end, but recent communications from officials and updated surveys indicate a bias shift toward holding the 3.50%-3.75% target range, with limited dots now favoring hikes. The June 16-17 FOMC meeting and upcoming inflation and employment releases will serve as key near-term catalysts that could reinforce or alter this consensus. Market-implied odds reflect aggregated trader assessments of these macro dynamics rather than a guarantee of outcomes.