Persistent inflation, with August core PCE at 3.4% and headline near 3.8%, alongside solid labor market conditions, underpins the 70% market-implied probability of exactly two 25-basis-point Fed hikes in 2026. The September FOMC meeting delivered the first increase since 2023, lifting the target range to 3.75%-4.00%, while the subsequent dot plot and October 7 minutes showed 16 of 18 participants favoring at least one additional hike by year-end to address upside inflation risks from energy prices and tariffs. This positions a December move as the primary remaining catalyst, with October largely expected on hold. Markets assign only 21.5% odds to one total hike and under 9% to three or more, reflecting trader consensus that policy will tighten modestly further before pausing.