Persistent inflation above the Fed’s 2% target, with May CPI expected near 4.2% YoY and April PCE at 3.8%, alongside a resilient labor market, is the main driver keeping the federal funds rate target at 3.50%-3.75% and shifting trader sentiment away from cuts toward a possible hold or late-2026 hike. Markets now price virtually no change at the June 16-17 FOMC meeting and see limited odds of easing this year, with futures implying a modest rise in the policy path by year-end. Recent April FOMC minutes highlighted growing official concern over sticky prices, while strong jobs data and energy-driven pressures have reinforced the data-dependent stance. Key upcoming releases include June CPI, employment reports, and the September FOMC with updated projections, which could alter the market-implied rate path if inflation moderates or accelerates further.