Will the Fed cut interest rates again or stand pat? These two choices seem to be the options laid out by Fed policymakers at the November meeting, and this week's two reports on inflation and the labor market may sway the final decision.

Wil Stith, bond portfolio manager at Wilmington Trust, said that if Thursday's inflation data comes in stronger than expected, and Friday's non-farm data is hotter than expected, 'I think they can discuss pausing rate cuts, as they have already cut rates by 50 basis points.'

Jeffrey Roach, Chief Economist at lpl financial, also believes that 'strong job growth may convince the Federal Reserve to pause rate cuts in November.'

However, other observers of the Fed believe that the data to be released on Thursday and Friday is unlikely to change the Fed's path of rate cuts.

Jamie Cox, Managing Partner at Harris Financial Group, said: 'Regardless of what the data says, the Fed is already on a path to cut rates by 25 basis points in November, and it is unlikely that the central bank will change this trajectory.'

Ellen Zentner, Chief Economic Strategist at morgan stanley Wealth Management, said, 'There is no reason to believe the Fed will not cut rates by another 25 basis points in November,' unless a significant surprise occurs in the job report.

Currently, many traders agree with this assessment. As of last Friday, investors expected the likelihood of a 25 basis point rate cut by the Fed at the November meeting to be over 90%.

Difficult to interpret data.

What is certain is that all Federal Reserve decision-makers will closely monitor the report released this week.

First, on Thursday, the latest data on Personal Consumption Expenditures (PCE) will be released, which is the Fed's preferred inflation indicator.

The market expects the year-on-year growth rate of core PCE (excluding volatile food and energy prices) to decrease from 2.7% to 2.6%. The Fed's goal is to gradually lower this indicator to 2%.

Another inflation reading, the Consumer Price Index (CPI), exceeded expectations in September. This provides new arguments for Fed officials advocating for gradual rate cuts after the significant cut in September.

The second key report this week will be the non-farm payroll data released on Friday.

This report may not provide a clear assessment for officials, as it may be disrupted by two major hurricanes which have led to temporary unemployment in the affected areas, and the data is also affected by the Boeing.$Boeing (BA.US)$Impact of the strike by Boeing employees (BA).

Economists expect the addition of 0.123 million new jobs in October, lower than the 0.254 million in September. The unemployment rate is expected to remain unchanged at 4.1%.

Federal Reserve Governor Waller said on October 14, "Unfortunately, interpreting the October jobs report is not easy."

Waller added, "This report is likely to show that due to the recent hurricanes and the strike by Boeing employees, temporary job positions have suffered significant losses." He expects the hurricanes to result in a reduction of over 0.1 million new job positions compared to the pre-disaster impact.

The latest release of the Federal Reserve's Beige Book shows a mild cooling in the job market, yet remains stable.

Limited layoffs, slight job growth with over half of the regional Federal Reserve banks reporting mild to moderate expansion, but hiring is primarily focused on filling vacancies rather than creating new positions. Wage growth has also slowed down.

"Gradual" and "moderate" rate cuts.

Waller is one of the Federal Reserve officials in recent weeks advocating for a "gradual" approach to rate cuts, as some new evidence they have received indicates that inflation and the job market are still hot.

Minneapolis Fed President Kashkari stated that he is considering a "moderate" rate cut in the coming quarters, while Kansas City Fed President Schmiedt pointed out that his preference is to "avoid significant movements."

Dallas Fed President Logan said that considering the increased risk of deterioration in the labor market and the danger of inflation rising again, interest rates will be gradually lowered.

Fed policymakers' median estimate in September is that there will be two 25-basis-point rate cuts in the remaining two meetings this year.

Atlanta Fed President Bostic is one of those considering keeping rates unchanged at the next meeting.

Despite hawkish members hinting at a possible pause in rate cuts, EY's Chief Economist Gregory Daco cited Fed Chairman Powell's guidance as the reason he believes the Fed will stick to two 25-basis-point rate cuts at the remaining two policy meetings this year.

Daco said in a statement, "Powell emphasized that policy gradualism will dominate before the end of the year."

Editor/Rocky