Start with tomorrow's PCE price index, the Fed's preferred inflation indicator. Both Wall Street and the Fed are able to use the CPI and PPI to pretty much peg the change in the PCE. The headline is expected to rise 0.5% for September , which will boost the year-over-year rate to 3.7% from 3.4%. The Fed could look past that, assuming it's driven by the continued rise in energy prices. But the core rate is seen rising 0.3%, raising the annual rate by a tenth to 3.1%.

The Fed's big problem today is explaining why it's holding rates steady when the inflation rate has worsened since its last meeting – and several indicators suggest more bad numbers to come.

What about the much-touted three-month annualized rate, which many doves have promoted as showing that inflation is under control? It fell to 2.05% last month, almost spot on with the Fed's 2% target. Time to cut, right? Not so fast. Model in a 0.3% rise in the core and the 3-month annualized rate shoots up to 2.7%. The Cleveland Fed's inflation nowcasting gauge sees core PCE in October running at 0.25%. Model that number in and the three-month annualized rate would rise to 3.24% in October. The takeaway: the gauge is so volatile that it serves as a poor guide for monetary policy.

The Cleveland Fed's trimmed mean, which removes extreme price changes from the CPI, has hovered between 2.6% and 2.7% for most of this year, showing little change. The Dallas Fed's trimmed mean has stood mostly alone in supporting a dovish take on inflation at 2.2%. It's worth noting, however, the Dallas Fed President Lorie Logan has herself cautioned that the measure may do too extreme a job of trimming away inflation.

Another problem the Fed faces: a seasonal pattern of inflation spiking up at the beginning of the year. Goldman Sachs sees inflation easing next year as pressures from tariffs, the AI buildout and energy abate. But it worries, "companies could take the opportunity provided by start-of-the-year price increases to pass along their higher costs, resulting in a larger 'January effect.' "

The danger of a hold today amid current inflationary pressures is that the Fed may need to do more in coming months. TD Securities writes: "It only takes one notably bad inflation report and/or a collection of strong labor market data for the market to start pricing larger odds of a 50bp rate increase in upcoming meetings."

—Steve Liesman