Persistent inflation, with core PCE at 3.4% year-over-year in August and headline near 3.8%, remains well above the Fed’s 2% target and has shown limited progress despite the September 25-basis-point hike to the 3.75-4.00% range. A resilient labor market, with unemployment near 4.1-4.2%, solid GDP growth, and upside risks from energy prices amid geopolitical tensions, underpin the FOMC’s median dot plot projecting one additional quarter-point increase by December. Recent hawkish remarks from officials including Waller, Kashkari, and Musalem reinforce expectations of further firming, aligning with market-implied odds near 80% for at least one more 2026 hike and contrasting with the pause likely at the October 27-28 meeting.