U.S. inflation rose 2.6% on an annual basis last month, representing an uptick from September when the Federal Reserve began cutting interest rates amid signs of cooling prices and a weaker labor market.

The U.S. central bank should proceed cautiously on further interest rate cuts to keep from inadvertently reigniting inflation.

Nov 12 (Reuters) - With inflation close to the Federal Reserve's 2% target, the labor market resilient, and the U.S. central bank in the process of lowering borrowing costs, policymakers are ready to respond if inflation pressures rise or the job market weakens, Richmond Fed President Thomas Barkin said on Tuesday.

The Federal Reserve cut its key interest rate by a quarter-point in response to a steady decline in once-high inflation that angered Americans and helped drive Trump’s election victory.

The Federal Reserve cut interest rates on Thursday for the second time in three months, likely setting the stage for a drop in borrowing costs.

Find out how the Federal Reserve’s decision will impact all aspects of borrowing and spending

The Dow and the S&P 500 ended slightly higher on Wednesday while the Nasdaq lost ground after October data showed consumer prices rising in line with expectations, adding support to bets that the U.S.