The Federal Reserve might have to rethink another cut at its December meeting if inflation surprises "to the upside" over the next month, Minneapolis Fed president Neel Kashkari told Yahoo Finance.

"That might give us pause," he said at Yahoo Finance’s INVEST conference on Tuesday.

The latest test comes Wednesday with the release of October’s Consumer Price Index (CPI), a key inflation measure the central bank will consider ahead of its last meeting of the year on Dec. 17-18.

Last week the Fed cut rates by a quarter percentage point, its second reduction in seven weeks.

The CPI report is expected to show headline inflation of 2.6%, a slight uptick from September's 2.4% annual gain in prices. On a "core" basis, which strips out the more volatile costs of food and gas, prices in October are expected to have risen 3.3% over last year for the third consecutive month.

Core inflation has remained stubbornly elevated due to higher costs for shelter.

Housing inflation, Kashkari said, is “the big elephant that is still out there,” but he is confident it will start to come down as new leases are signed at lower rates.

Kashkari declined to say how proposed economic policies from President-elect Donald Trump might affect the Fed’s expectations for a series of additional rate cuts in 2025, pointing out that the central bank can’t incorporate any changes into its models until action is taken.

“We at the Fed simply have to wait and see,” he said.

Economists say Trump’s combination of across-the-board tariffs, tax cuts, and mass deportations of undocumented immigrants would put new pressure on inflation and balloon the deficit, all of which will make it more challenging for the Fed to cut rates.

Many economists are already scaling back their expectations for the number and pace of rate cuts next year on account of these proposed policies.

New tariffs on their own, Kashkari said, are not necessarily inflationary in the long run because they act as a "one time increase in prices."

Where they could push long-term inflation higher is if other nations respond with their own duties, creating a “tit for tat” trade war.

‘Right now we are all just guessing,” he added.

The same unknowns exist on the subject of mass deportations and the impact that could have on the US job market.

“It could have a big effect but we need to wait and see,” he said.

Kashkari said the Fed will continue to focus on its dual mandate of price stability and maximum employment, even if a new president were to apply more pressure on the central bank to cut rates.