Most of the time, it would be very foolish to suggest that a single data release could determine a policy decision by the Federal Reserve. After all, Fed officials -- board governors, regional presidents or senior staff members -- pride themselves on considering a wide array of numbers and multidimensional models. Yet the jobs report for August that will be released Friday could well come very close to being the exception.

With some stronger economic data that have topped consensus expectations, particularly when it comes to the functioning of the labor market, Federal Reserve Chair Janet Yellen rightly observed Friday that “the case for an increase in the federal-funds rate has strengthened in recent months.” But a hike is not yet a done deal for at least two reasons: the overall domestic economic picture remains mixed and the international context is rather fragile and uncertain.

Against this background, the new employment data could have an important influence on how the Fed decides between hiking interest rates for only the second time in 10 years at the Open Market Committee's next meeting in mid-September, or waiting until a subsequent meeting (most likely December). To highlight what is specifically at play, let us assume for illustrative reasons that the FOMC, the Fed’s highest policy-setting committee, were to meet on the same day as the jobs report is released. Under this scenario, I would suggest that the Fed would:  

Outcomes in between, including contrasting developments in wage and job growth, would make things a lot more complicated for Fed officials. And while I would suggest that, for the sake of containing the growing risk of future financial instability, they should be inclined to take a small step in normalizing monetary policy rates unless the report is notably weak, I suspect that mixed data would be more likely to push them to the policy sidelines yet again.

In real life, the FOMC will meet almost three weeks (Sept. 20-21) after the release of the August jobs report. As a result, the Fed will have a host of additional domestic and international data to review. In this context, the August labor market numbers will play an influential but not deterministic role.

In the meantime, markets would be well advised to revise upward what remains an overly low implied probability of Fed policy action for the remainder of this year. And, as I argued on Aug. 26, the rest of us should continue to try to broaden the policy discussion beyond central banks and focus a lot more on what other government agencies can and should be doing to promote high inclusive growth and genuine financial stability.