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.

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%.

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