Elevated inflation around 3.4-3.7% and resilient U.S. growth near 2.3% have driven the Federal Reserve to hike its target range to 3.75-4.00% in September 2026, with officials projecting further tightening or stability through 2027 amid supply shocks from tariffs, energy prices, and AI demand. The stable labor market, with unemployment at 4.1%, reduces urgency for accommodation and supports market-implied odds near 95% against an emergency cut before 2027. This consensus reflects the Fed’s focus on returning inflation to 2% without disrupting expansion. Tail risks include a sharp geopolitical escalation or sudden financial stress that could force rapid easing, though current data show limited signs of such catalysts.