Persistent inflation remains the dominant driver of trader sentiment on the timing of Federal Reserve rate cuts, with the May 2026 CPI rising 0.5% month-over-month and 4.2% year-over-year—the highest annual pace in three years—fueled by a sharp energy price surge. The federal funds target range sits at 3.50–3.75%, and futures markets currently price negligible odds of easing through year-end amid a resilient labor market and firm growth. The June 16–17 FOMC meeting, which includes updated economic projections, is the immediate catalyst, with analysts expecting the removal of any easing bias language. Subsequent meetings in July and September will hinge on whether core inflation moderates and energy shocks subside.