Recent July 2026 CPI data showed headline inflation easing modestly to 3.4% year-over-year and core at 2.5%, aligning with forecasts but remaining well above the Fed’s 2% target amid lingering energy pressures. At its late-July FOMC meeting, the Committee held the federal funds rate steady at 3.5%-3.75% in a 9-3 vote, with dissenters favoring a hike as monetary policy remains restrictive. CME FedWatch Tool pricing reflects elevated odds of no change or a 25-basis-point increase at the September 15-16 meeting, with limited market-implied probability for cuts given sticky price trends and labor-market resilience. Traders are watching upcoming August CPI and employment reports for signs that could shift rate-path expectations ahead of the policy decision.