Traders are pricing in a hold on the federal funds rate at its current 3.50%–3.75% target range through year-end 2026, driven by persistent inflation pressures from elevated energy costs amid the Middle East conflict and a resilient labor market with unemployment near 4.3%. Recent April 2026 FOMC minutes and May communications underscore the Fed’s data-dependent stance, with officials noting risks from higher inflation readings like April’s 3.8% year-over-year CPI while core PCE remains above the 2% target. Market-implied odds from CME FedWatch reflect this caution, showing over 95% probability of no change at the June 17–18 meeting and limited cuts expected until 2027. Key upcoming catalysts include the June dot plot, upcoming CPI and nonfarm payrolls releases, and leadership transition after Chair Powell’s term ends, which could shift policy expectations if inflation moderates or labor conditions weaken.