**Persistent inflation above the Fed's 2% target and a resilient labor market have anchored trader expectations for the federal funds rate near 4.25% by year-end 2026.** Following the September 2026 FOMC decision to raise the target range to 3.75%-4.00%, the median dot plot projected a 4.1% endpoint for 2026, with 16 of 18 participants anticipating at least one additional 25-basis-point hike before December. Recent statements from officials, including expectations of further tightening if price pressures remain elevated, have reinforced this path, while mixed incoming data on core PCE and payrolls have introduced limited uncertainty around the exact timing. The resulting market pricing reflects broad consensus around modest additional policy firming rather than aggressive cuts or deeper hikes.