**Recent July 2026 data showed Core PCE YoY holding steady at 3.3%, with a 0.2% monthly increase matching expectations amid resilient services prices and lingering effects from earlier supply shocks.** This print followed a similar 3.3% reading in June and reinforced trader views that disinflation has stalled above the Fed’s 2% target, with the Cleveland Fed’s August nowcast at 3.34%. Key drivers include elevated shelter and services inflation, tariff pass-through into core goods, and residual impacts from Middle East-related energy and supply disruptions earlier in the year, which have kept the 12-month rate well above consensus paths projected just months prior. The FOMC’s June SEP median for 2026 core inflation was revised upward to 3.3%, aligning with current levels and supporting market-implied odds clustered around 3.2–3.4%. With leading probabilities closely matched (3.3% at 24%, 3.2% at 15.5%), outcomes hinge on whether August’s monthly print moderates toward 0.1–0.2% or reaccelerates, influenced by consumer spending trends, housing costs, and any further easing in goods prices. The September 30 release will resolve the market shortly after the September FOMC meeting, where policy expectations already incorporate persistent inflation risks.