Elevated inflation and the Federal Reserve’s recent hawkish shift underpin the 96.5% market-implied odds of zero federal funds rate cuts in 2026. After the September 16 unanimous 25-basis-point hike to a 3.75–4.00% target range—the first in over three years—the FOMC’s updated projections raised the median end-2026 rate to 4.1%, signaling one additional increase and no easing. August CPI held at 3.4% year-over-year with core at 2.4%, while July PCE inflation reached 3.7%; energy prices remain elevated amid Middle East tensions. The labor market stays resilient with 4.1% unemployment and solid GDP growth, keeping policy focused on containing price pressures. A sharp disinflation trajectory or abrupt weakening in hiring and spending could reopen the door to cuts, though current data and guidance point to rates staying restrictive through year-end.