Recent soft July 2026 CPI data showing headline inflation easing to 3.4% year-over-year and core at 2.5% has tempered expectations for immediate policy tightening ahead of the September 15-16 FOMC meeting, though the Fed held rates steady at the 3.50-3.75% target range in late July amid a 9-3 vote with three dissents favoring a 25 basis point hike. Geopolitical tensions and associated energy price spikes briefly elevated September hike probabilities above 60% before moderating, while futures markets currently price roughly a 35-36% chance of a rate increase at the next meeting and anticipate a modestly higher year-end policy rate near 3.8%. Traders are monitoring upcoming inflation releases, labor market indicators, and any shifts in FOMC communications for signals on whether persistent above-target inflation will delay easing or prompt further tightening.