The Federal Reserve (Fed) doesn’t have an easy job. The central bank is tasked with putting interest rates at just the right level – an often elusive, sweet spot where they create low and stable inflation and maximum employment. Leave them too high, and the Fed risks dragging down the economy and the job market. Lower them too quickly, and it risks a brand-new surge of inflation – one that could force it to hike rates all over again.

Earlier this month, the Fed’s chair said the labor side of the equation has become the central bank’s chief concern, with job growth running below the breakeven rate for the first time since the pandemic crisis – despite a still-low unemployment rate. Job creation has slowed a lot since June, to a pace of just 29,000 per month.

That said, inflation’s not exactly where the Fed wants it to be. The central bank’s preferred consumer price gauge, the broad-based personal consumption expenditures (PCE) index, has been stuck above its 2% target for some time. The report’s closely watched “core” measure – which strips out volatile items like food and fuel – rose at an annual pace of 2.9% in August, the same as the month before and in line with economist expectations. Mind you, steep new taxes on imported goods are likely to blame for at least some of that rise. And the Fed chief has said those tariffs will probably only have a one-time impact on prices. That was some of the rationale when the Fed trimmed interest rates earlier this month.

So the key US jobs report, due Friday, is the next big thing for the Fed. And economists aren’t feeling very hopeful. A string of weak data has pushed their forecasts down to just 40,000 new jobs in September – about half of what they were forecasting before. If the total lands much lower than that, it could rattle the current optimism in the stock market – and pressure the Fed to cut rates sooner and harder than planned.