Persistent inflation pressures, fueled by elevated oil prices amid geopolitical tensions, combined with resilient labor market data including strong May job gains, have shifted market-implied odds toward a potential Federal Reserve rate hike by year-end 2026. The federal funds target range stands at 3.50%-3.75%, with futures markets assigning roughly a 40% probability of a 25 basis point increase by December while pricing near-certain holds at the June 16-17 FOMC meeting under new Chair Kevin Warsh. Traders now see limited scope for cuts this year as the dot plot may revise higher, reflecting firmer growth and price data that reduce the likelihood of easing. Key upcoming catalysts include the June CPI release and July FOMC projections, which could further influence the policy path if inflation remains above target.