Recent softer-than-expected August PCE inflation data and dovish comments from Fed officials including New York Fed President Williams and Vice Chair Jefferson have cooled expectations for an October rate increase, supporting the 60% market-implied odds on two total 25-basis-point hikes in 2026. The September FOMC meeting delivered the first hike in three years to the 3.75-4.00% range, with the median dot plot projecting one additional move by year-end amid resilient growth and sticky inflation around 3.4% core PCE. Traders are now watching Friday’s September nonfarm payrolls and the December FOMC meeting as key catalysts that could shift the balance toward one or three hikes depending on labor market and price trends.