Persistent inflation, with the Fed’s preferred core PCE measure near 3.4 percent in recent readings and headline PCE at 3.7 percent for 2026, remains the dominant driver of trader sentiment on rate paths. After the September 25-basis-point hike to a 3.75–4.00 percent target range—the first since 2023—the September dot plot showed 16 of 18 participants expecting at least one additional increase by year-end. Labor market data through September, with unemployment near 4.2 percent and steady payroll gains, have provided little counterweight. Markets now price a low probability of cuts before the December 8–9 FOMC meeting, while futures reflect an elevated chance of further tightening. The October 27–28 decision and November CPI release represent the next near-term catalysts.