Traders see an interest-rate cut next month as a coin toss as resilient economic data empowers Federal Reserve officials to take a potentially more-cautious approach to easing.

A strong economy is giving Federal Reserve officials room to move “carefully” as they lower interest rates, the central bank chair said.

But if inflation continues to inch upward, the central bank may decide it needs to leave rates high to avoid a repeat of runaway inflation. Inflation peaked at 9.1% in June 2022 before slowly making its way back down closer to the Fed's target range of 2%.