**Elevated inflation near 3.4% year-over-year through August 2026 and the Fed’s September hike to the 3.75-4.00% target range remain central to pricing, but recent labor-market softening has shifted near-term expectations.** A weaker-than-expected September jobs report and subsequent comments from senior officials—including New York Fed President Williams and Vice Chair Jefferson—signaling “no need for urgency” have sharply reduced the odds of an October move, with futures now implying roughly 20% odds of a hike at the October 27-28 meeting. Traders therefore assign the highest probability (47.5%) to a Pause-Hike-Pause sequence across the October, December, and January meetings, reflecting a view that persistent price pressures above the 2% target will prompt one additional 25-basis-point tightening by year-end before policy pauses. This path aligns with the September dot plot’s median projection for a 4.1% funds rate by December while incorporating the latest data-driven caution on pacing. Key near-term catalysts include the October 14 CPI release and the October FOMC statement, which will clarify whether the recent labor-market signal outweighs ongoing inflation risks in the committee’s reaction function.