Elevated inflation risks from surging energy prices tied to the Middle East conflict, alongside a resilient labor market, have driven market-implied odds toward no Federal Reserve rate cuts through year-end 2026. The FOMC held the federal funds rate steady at the 3.50%-3.75% target range in its April 28-29 meeting, with an 8-4 vote reflecting heightened dissent and caution. Recent CPI data showed a rise to 3.3% year-over-year in March, reinforcing policymakers' data-dependent stance and reducing expectations for near-term easing. Traders now assign roughly 70% probability to unchanged policy through December, per CME FedWatch futures. Key upcoming catalysts include the June FOMC meeting and fresh inflation and employment releases, which could shift the rate path if labor conditions weaken or energy-driven price pressures ease.