Elevated inflation remains the dominant driver of FOMC policy expectations, with headline PCE at 3.7 percent and core PCE at 3.3 percent through June amid energy price spikes tied to Middle East tensions. The labor market has stabilized near maximum employment, with the unemployment rate holding at 4.2 percent and job gains moderating but still positive. At its late-July meeting, the Committee kept the federal funds target range at 3.50–3.75 percent for the fifth consecutive time, though three members dissented in favor of a 25-basis-point hike, signaling heightened vigilance. Markets now price a modest probability of tightening by year-end versus earlier expectations of cuts. The September 15–16 FOMC meeting, which includes updated dot-plot projections, will provide the next key signal on whether inflation data or geopolitical developments shift the rate path.