Markets ended the week largely unfazed by a hotter wholesale inflation print and signs of firming consumer prices, but some economists warn the underlying story is more concerning than investors seem to believe.

The Producer Price Index (PPI) for July surged to a three-year high, with services inflation playing a key role in the gains. A similar trend appeared in the latest Consumer Price Index (CPI) report earlier this week as firming prices in services like dental care and airline fares marked a surprise reversal from the prior softening that had been offsetting higher goods prices from tariffs.

The fresh data now puts the Federal Reserve, which targets 2% inflation, in a precarious position as tensions between its dual mandate of price stability and maximum employment begin to surface.

Massive downward revisions in July’s jobs report last week fueled concerns that the labor market is softening too quickly, strengthening the case for rate cuts. But the hotter-than-anticipated inflation data could suggest the need for more restraint.

As of Friday afternoon, markets continued to price in about an 85% probability that the central bank will cut rates in September, according to the latest CME FedWatch Tool. Federal Reserve Chair Jerome Powell’s Jackson Hole speech next week could give hints on the Fed’s next policy move.

Some economists argue the Fed should hold off on rate cuts — or even consider raising rates.

“These are broad-based inflationary pressures,” Lauren Saidel-Baker, economist at ITR Economics, told Yahoo Finance following this week’s hotter-than-expected PPI print. “I see more reason for rates to be rising in order to not let inflation get away from us.”

Saidel-Baker noted these pressures have been building for years and aren’t solely the result of tariffs. She pointed to higher wages and rising energy costs as key drivers now feeding into the data. She also stressed that the full impact of tariffs will take time to emerge.

“Inflation is the risk that’s on our doorstep, much more so than the labor market,” Saidel-Baker emphasized. “Fed officials know that.”

Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments

Chicago Fed president Austan Goolsbee cautioned Wednesday that a continued rise in services prices, similar to what was seen in this week’s CPI report, would be worrisome

“Services are not tied to the tariffs,” he said. “Everyone is hoping that’s just a blip. There’s noise in the data. If you start to get multiple months where the components suggest that the impact of tariff inflation is not staying in its lane, that would be more of a concern.”