Persistent inflation, highlighted by the May 2026 CPI rising 4.2% year-over-year—the highest since April 2023—driven by a 23.5% surge in energy prices amid geopolitical tensions, has shifted trader sentiment toward a prolonged Fed hold at the current 3.50%-3.75% target range. Market-implied odds via futures and prediction platforms now assign roughly 99% probability of no change at the June 16-17 FOMC meeting and favor zero cuts for the remainder of 2026, reflecting a resilient labor market and core CPI at 2.9%. This pricing incorporates the removal of any easing bias under incoming Chair Kevin Warsh, with risks tilted toward later hikes if price pressures persist. Key near-term catalysts include the July 14 CPI release and subsequent FOMC decisions through year-end.