A further quarter-point cut in December has been expected, but recent inflation data raised concern that progress may have stalled. One key measure, the personal consumption expenditures price index stripped of food and energy costs, has been mired in a range from 2.6% to 2.8% since May, well above the Fed's 2% target.

"Unemployment is going to come down, growth is going to come up, inflation is going to come up," Deutsche Bank's chief US economist said.

Federal Reserve Bank of New York President John Williams said Monday more interest-rate cuts will be needed, but that the right timing would depend on upcoming data.

Federal Reserve Bank of New York President John Williams said on Monday the U.S. central bank is likely to lower its interest rate target further over time as inflation pressures continue to cool. “Monetary policy remains in restrictive territory to support the sustainable return of inflation to our 2 percent goal,