Recent July 2026 PCE data showed headline inflation at 3.7% and core at 3.3% year-over-year, remaining well above the Fed’s 2% target amid elevated energy prices linked to Middle East tensions. The FOMC held the federal funds rate steady at 3.50%-3.75% in its July meeting with a hawkish tilt from Chair Warsh, while futures markets assign roughly even odds to a September hike and price the first cut for 2027. Strong job gains, resilient consumer spending, and sticky services inflation continue to support a patient policy stance, with upcoming August CPI and September FOMC decisions likely to shape near-term rate path expectations.