Economic data has been stronger than expected and several voting members of Fed’s interest-rate committee have expressed caution about easing Federal Reserve Chair Jerome Powell speaks at a news conference in Washington earlier this month.

Stronger-than-expected economic data and sounds of caution from key Federal Reserve officials has raised the prospect that the central bank might skip an interest-rate cut at next month’s meeting.

The Fed is trying to navigate an economy where inflation is rising and the labor market has shown signs of weakening at the same time. Fed officials have said they are lowering rates in response to a weakening labor market, but are keeping an eye on inflation.

Yet the new weekly jobless-claims data released Thursday offered some assurance that labor-market conditions are not deteriorating too much, said Nancy Vanden Houten, lead economist at Oxford Economics, in a research note.

She said the data support her forecast that the Fed will remain on hold at its Oct. 28-29 meeting and will delay its next rate cut until December.

In separate speeches on Thursday, two voting members of the Fed’s 12-member interest-rate committee expressed some skepticism about the need for additional rate cuts with inflation remaining stubbornly above the Fed’s 2% target.

Kansas City Fed President Jeff Schmid said that the current stance of policy “is the right place to be.”

“My view is that inflation remains too high while the labor market, though cooling, still remains largely in balance,” he added.

Chicago Fed President Austan Goolsbee said he was worried about a quick series of rate cuts.

“I’m somewhat uneasy with front-loading too many rate cuts” when the Fed is just counting on inflation being transitory, Goolsbee said.

Noting that inflation has been above the Fed’s target for five years, Goolsbee said he wanted “to be sure” that inflation was coming down.

Fed governor Michael Barr said in a speech Thursday that there was too much focus on what the Fed will do between now and December and not enough on the bigger picture of where rates will go next year.

“I do think the most likely direction of travel, the base case, is that it will be appropriate to reduce rates over time. I just think we need to be cautious about how we do that,” he said.

Inflation might continue rise in 2026 but then decline over time, Barr added, while the Fed has to guard that the price increases from tariffs don’t become embedded in the economy.

On Monday, St. Louis Fed President Alberto Musalem, who is also a voting member, said “there is limited room for easing further without policy becoming overly accommodative.”

Traders in derivative markets still expect an October rate cut, but lowered the odds of a move to 83%, down from 93% on Wednesday.

Many economists are sticking with the view that the Fed will ease in October.

Thomas Simons, chief U.S. economist at Jefferies, said the labor market is not out of the woods yet.

Anecdotal reports, like the Fed’s “beige book” survey of business contacts, suggest that more and more firms are finding it hard to avoid reducing headcount to reduce labor costs.

“We think the Fed will cut again in October and December by 25 basis points a piece,” Simons said. The one wild card might be a lack of economic data if there is a government shutdown; that might cause the Fed to wait, he said.

Tim Duy, chief U.S. economist at SGH Macro Advisors, said he thinks Fed Chair Jerome Powell supports rate cuts in October and December.

Duy said that the markets shouldn’t read too much into the comments from regional Fed bank presidents who are wary of more rate cuts. He noted Powell and the other members of the seven-member Board of Governors in Washington set the policy direction, and the board is “stacked” with officials who want to cut rates.

Some economists said the Fed might pause after the October meetings.

“We think a major shift in labor market momentum would be needed to prevent another cut in October,” said Michael Feroli, chief U.S. economist at J.P. Morgan.

“However, if labor-market risks don’t materialize in the fourth quarter – particularly in the form of a higher unemployment rate – then the Fed’s interest-rate committee might pause after the October or December meetings,” he said.

There is only one more jobs report before the Fed’s next interest-rate committee meeting.

-Greg Robb

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