**Persistent inflation above the Fed's 2% target remains the dominant driver of trader positioning on the federal funds rate path through year-end 2026.** Following the unanimous September 16, 2026, 25 basis point hike that established the current 3.75–4.00% target range, FOMC minutes highlighted upside inflation risks and broad support for at least one additional increase before December. The effective federal funds rate stands near 3.88%, while the September SEP median projected 4.1% for both end-2026 and end-2027. Markets price a high probability of holding rates at the October 27–28 meeting, with the December 8–9 gathering and updated projections serving as the key near-term catalyst. Recent data showing core PCE at 3.4% and unemployment near 4.1% have reinforced expectations that the policy rate could test 4.25% or higher before 2027, consistent with futures-implied paths and the Committee's focus on preventing unanchored inflation expectations.