Richmond Fed President Tom Barkin said still-elevated inflation and a strong recent jobs number could change the Fed’s risk outlook at a time when the US conflict with Iran could put further pressure on core consumer prices.

Last year’s Fed rate cut “was based on labor market risks rising while inflation risks were low. The data that has come in over the last few months suggests it has moved in the other direction,” Barkin said on Bloomberg Television.

“With the PCE numbers we expect next week, you’ve had a few months of relatively high inflation. It certainly puts to rest any conclusion that we’re done fighting this,” Barkin said of the report, which is expected to show the price index of personal consumption expenditures about 2% above the F%2 target.

The Fed meets on March 17-18 to discuss what is now a rapidly changing landscape with the US involved in the Trump administration’s open-ended military action in Iran. The war is driving up crude oil prices, testing the global economy with an unpredictable set of risks, and reshaping US markets with higher interest rates on Treasury bonds and dashing investors’ hopes for a Fed rate cut.

The jobs data for February will be released on Friday and has become an important touchpoint. Unexpectedly strong job growth in January, adding 130,000 new positions to the economy when employment growth nearly stalled, fueled views among officials that the labor market may be on the verge of a serious slide that warrants immediate rate cuts.

But with most private job growth concentrated in a single industry, healthcare, those concerns haven’t disappeared. Economists polled by Reuters expected employment growth to cool to around 59,000 in February.

Although low by historical standards, that number is now considered roughly what the economy needs at a time of restricted immigration to keep the unemployment rate stable, and the consensus forecast is that the unemployment rate will remain unchanged at 4.3%.

Some see the risk of an upside surprise, which would limit further assumptions for the Fed to remain on hold until new data shows clear cracks in the job market or a change in the path of inflation.

The investment firm is developing a 401k plan data point for private job growth of 81,000 based on Vanguard’s new data analysis, with the labor market “looking less like the start of a recession and more like quiet resilience,” wrote Vanguard senior economist Adam Schickling.

Payroll processor ADP’s monthly employment report also showed a larger-than-expected increase in private jobs, while keeping February’s jobless rate unchanged at 4.3%, based on estimates from the Chicago Federal Reserve, a combination of official figures and private data.

Torsten Schlock, chief economist at Apollo, said recent improvements in data on things like manufacturing and factory orders showed that “non-farm payrolls…could be significantly stronger than currently expected by consensus.”

Investors have started to lower their expectations for a Fed rate cut following the US conflict with Iran and a surge in fossil fuel prices. Brent crude has risen nearly 15% to $83 a barrel since the end of February, and US gas prices are following suit.

The US economy is affected by higher energy costs than Europe and many other nations. However, uncertainties surrounding the conflict have clouded the Fed’s outlook, which is increasingly focused this year with inflation expected to gradually decline and, eventually, further rate cuts.

Led by Fed Chair Kevin Warsh, who will take over from President Donald Trump when current Chairman Jerome Powell’s term ends in May, the central bank was expected to cut rates in June based on confidence in the impact of administration policies on growth and productivity.

Those bets are getting out now, maybe not seeing a rate cut until September, and maybe only a quarter point drop this year. The US Rising yields on Treasury securities could pose a different challenge if financial conditions begin to tighten broadly and threaten to slow the economy. That could potentially expose the Fed to both rising prices and risks to growth, a challenge for policymakers tasked with maintaining both stable prices and maximum employment.

“Obviously, you watch oil prices. While the US is no longer a net importer, it’s still the case that the price at the pump is very important in terms of sentiment, in terms of the crowding of other costs,” Barkin said. “They’ve gone up in the last week. You can see it when you drive by. But of course, nobody knows if this is short-term or long-term.”