If inflation comes in too hot, the Federal Reserve may decide to put its foot back on the gas and announce larger interest rate hikes designed at slowing down the economy and reducing demand for goods and services. 

The Fed is likely wary after the Labor Department last week revised its inflation figures up for previous months. Those changes revealed that prices rose 0.1 percent from November to December, instead of falling 0.1 percent. 

The central bank recently committed to smaller interest rate hikes based on the premise that inflation was easing. But the revisions indicate the Fed hasn’t made as much progress fighting inflation as it once thought.  

Fed Governor Michelle Bowman said Monday that the Fed needs to keep hiking rates to “bring demand and supply into better balance.” 

Continued rate increases would spell bad news for markets and the broader U.S. economy, increasing the risk of a recession. But Fed officials have stuck with their goal of reducing inflation to 2 percent, even if more than 1 million people lose their jobs. 

Analysts predict that annual inflation will come in at 6.2 percent in January, down from 6.5 percent in December, while prices are expected to jump 0.5 percent month-to-month. That represents an acceleration from previous months. 

The Labor Department is changing its CPI calculation for the January report by placing more of an emphasis on the housing market and less on used cars, which could lead to a higher figure. The Hill’s Tobias Burns has the details in this story.