Top officials at the Federal Reserve have displayed a rare degree of public disagreement over a possible interest rate cut next month.

In recent days, sentiment shifted dramatically in favor of an interest rate cut as some influential central bankers voiced openness toward the move, futures markets showed. Still, discord remains.

A rate cut could reduce expenses associated with everything from home mortgages to credit cards to car payments, making it cheaper to get a loan or refinance one.

The policy would also ease borrowing for businesses and potentially boost hiring, but it risks driving up inflation at a time when many Americans struggle with everyday costs.

“We haven’t seen this much uncertainty from the Fed in a long time,” John Sedunov, a finance professor at Villanova University’s School of Business, told ABC News.

Here’s what to know about why the Fed is divided over its rate decision and what the policy could mean for you.

Why is the Fed divided over a possible interest rate cut?

Inflation has picked up in recent months, putting price increases a full percentage point above the Fed’s target of 2%. Meanwhile, hiring has slowed, posing a risk of an economic double-whammy known as “stagflation.”

Those conditions have put the Fed in a bind, since the central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressure on both of its goals, the Fed primarily holds a single tool: interest rates.

“We have one tool,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last month. “You can’t address both of those at once.”

If the Fed holds interest rates steady as a means of protecting against tariff-induced inflation, it risks a deeper slowdown of the labor market. On the other hand, if the Fed lowers rates to stimulate the economy in the face of a hiring slowdown, it threatens to boost spending and worsen inflation.

Policymakers at the Fed disagree about whether to prioritize containing inflation or jolting employment,” John Sedunov, a finance professor at Villanova University’s School of Business, told ABC News.

“The Fed is fighting with this idea: Do we push inflation more toward our goal or do we do something about the job market?” Sedunov said. “It’s a tough line to walk.”

Why is momentum building in favor of an interest rate cut?

The odds have shifted significantly in favor of an interest rate cut at the Fed’s next meeting.

The chances of a quarter-point interest rate cut stand at nearly 85%, surging from a level as low as 30% last week, according to CME FedWatch Tool, a measure of market sentiment.

The prospects appeared to move in response to a murky jobs report and public statements from two allies of Powell on the committee charged with setting rates.

On Friday, a jobs report for September sent mixed signals about the labor market. Employers added far more workers than expected in September, though hiring fell short of a breakneck clip. Meanwhile the unemployment rate ticked up to 4.4%, a low figure by historical standards but the highest recorded since October 2021.

New York Fed President John Williams, who is often in lockstep with Powell, on Friday voiced openness toward a rate cut, telling reporters he still saw “room for a further adjustment in the near term.”

Days later, San Francisco Fed President Mary Daley took a similar position, telling reporters she sees room “for a further adjustment in the near term.” Daley, who isn’t voting on interest rates this year, is widely viewed as a supporter of Powell.

“Both of them came out in pretty clear support of a rate cut,” Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics and a former Federal Reserve official, told ABC News. “Both are pretty centrist and close to chair [Powell].”

“A week ago, things were up in the air. They mostly moved because of Williams and Daley,” Gagnon added.

What would an interest rate cut mean for you?

A quarter-point interest rate cut would reduce the Fed’s benchmark rate to a level between 3.5% and 3.75%.

That figure would mark a significant pullback from a peak in 2023. At the outset of the pandemic, interest rates stood at 0%.

Still, a reduction of interest rates could offer some relief for mortgage and credit card borrowers. Savers, however, stand to lose income as interest rates decline for accounts held at banks.