U.S. inflation data just came out, and it was surprising.

CPI came in at 3.7%, its highest level in four months.

Core CPI rose to 2.6%, its highest level in three months.

Now, the U.S. labor market is already weak, while inflation remains high.

If the Fed keeps interest rates unchanged, it risks inflation rising further.

If the Fed raises rates, it risks further deterioration in the labor market.