Recent July CPI data showed headline inflation easing to 3.4% year-over-year and core at 2.5%, providing modest relief but leaving readings well above the Fed’s 2% target amid lingering energy pressures. The FOMC held the federal funds rate steady at 3.50–3.75% in its late-July meeting by a 9–3 vote, with minutes revealing that several participants viewed further tightening as likely if price pressures fail to moderate. Market pricing via Fed funds futures currently assigns a 64% probability of no change at the September 15–16 meeting and only a slim chance of cuts this year, reflecting trader focus on resilient growth, stable labor conditions, and the risk of reacceleration. Key upcoming catalysts include the August CPI release on September 11 and the next FOMC decision, which will shape near-term policy expectations.