Persistent inflation above the Fed’s 2% target, reinforced by energy price shocks from Middle East developments and rising AI-related costs, has shifted trader expectations sharply toward no federal funds rate cuts in 2026. The FOMC held the target range at 3.50%–3.75% at its April 28–29 meeting amid a resilient labor market, and futures and prediction markets now assign roughly 97% probability of an unchanged policy at the June 16–17 gathering. Market-implied odds for any 2026 easing have fallen from one-to-two cuts priced in January to near zero, diverging from the median dot plot’s single projected reduction. Key upcoming releases including the May CPI and employment data will test whether this hawkish repricing holds or if weaker growth data reopens the door to policy easing later in the year.