Recent August 2026 CPI at 3.4% year-over-year, alongside the Cleveland Fed nowcast of 3.50% for September, anchors trader expectations amid sticky core services and energy-driven upside. Persistent goods inflation from prior tariffs, elevated gasoline prices, and limited progress toward the Fed’s 2% target—evident in the September FOMC median PCE projection of 3.7% for 2026—support the concentration of implied probability around 3.5–3.7%. The Federal Reserve’s rate hike at its mid-September meeting and mixed labor-market signals further reinforce this range, with September data due mid-October serving as the key near-term catalyst.