Elevated inflation remains the dominant factor shaping Fed rate expectations, with April 2026 CPI rising 3.8% year-over-year—above the 3.3% March reading—largely due to energy price surges from geopolitical tensions. The Federal Open Market Committee held the federal funds rate target at 3.5%–3.75% following its late-April meeting and signaled caution around persistent price pressures, resulting in market-implied odds exceeding 98% for no change at the June 16–17 gathering. May CPI data, due June 10, along with labor market indicators and any shifts in the incoming leadership's tone, represent the next key inputs that could alter the pace of potential easing later in 2026.