The Federal Reserve's September 2026 decision to hike the federal funds rate 25 basis points to a 3.75-4.00% target range, coupled with an updated dot plot showing a 4.1% median endpoint for year-end 2026, has driven market-implied odds toward additional tightening before 2027. Persistent core PCE inflation near 3.0%—well above the 2% target—alongside revised upward growth forecasts and stable unemployment around 4.2%, underpin the hawkish pivot. Futures markets currently price an 85-88% probability of at least one more 25-basis-point increase by December 2026. Key catalysts ahead include the October 27-28 and December 8-9 FOMC meetings, where incoming inflation and labor data could shift the path toward a higher terminal rate or a pause.