The Federal Reserve’s September 2026 decision to raise the target range to 3.75%-4.00%—its first hike since 2023—remains the dominant driver of trader positioning on the federal funds rate path before 2027. Persistent inflation, with the median SEP projecting 3.7% headline PCE for 2026 and core at 3.4%, combined with resilient domestic spending and a stable 4.1% unemployment rate, has produced a hawkish dot plot showing 16 of 18 participants favoring at least one additional 25-basis-point increase by year-end and a median funds rate of 4.1% through 2027. Market-implied odds currently assign the highest probability to the upper bound reaching 4.25% before 2027, reflecting the Committee’s emphasis on upside inflation risks over balanced labor-market concerns. Key near-term catalysts include the October 14 CPI release and the October 27-28 FOMC meeting, where futures markets price an 83% chance of no change.