Persistent inflation above the Federal Reserve’s 2% target, with August 2026 CPI at 3.4% year-over-year and core measures near 2.4%, remains the dominant driver behind the 74.5% market-implied probability of a 25 basis point rate increase at the December FOMC meeting. September FOMC minutes and the latest dot plot reinforced this outlook, with most participants judging an additional hike appropriate by year-end amid resilient growth and limited progress on price stability. Recent softer employment data has lowered odds of an October move, shifting focus to incoming September CPI and subsequent releases that could confirm or temper the tightening path priced into Treasury yields and futures markets.