A federal government shutdown is delaying key economic reports on jobs and inflation, hampering the Federal Reserveโs ability to decide whether to cut interest rates at its upcoming October meeting, according to Investopedia. The shutdown has halted operations at the Bureau of Labor Statistics, which produces crucial data the Fed relies on. Without these reports, policymakers are left with less reliable private-sector data, complicating efforts to assess the economyโs health. While a rate cut was expected, the lack of official data could push the Fed to delay action, echoing past shutdowns where uncertainty led to cautious decision-making. They write:
The federal government shutdown will delay key reports on the job market and inflation, making it harder for officials to decide whether to cut interest rates later this month.
The shutdown affects the government agencies that produce data the Fed relies on to set interest rates. That includes the Bureau of Labor Statistics, which will “completely cease operations” in the event of a shutdown, according to a memo dated Sept. 26 from its parent agency, the Department of Labor.1ย The bureau produces the most comprehensive and widely watched measures of the job market and inflation, including aย highly anticipated monthly jobs report due Friday that will now be delayed.
Deliberating Without Data
The lack of job market data could be especially vexing for the Fed, which cut interest rates in September to lower borrowing costs and stabilize a shaky job market. The Fed is scheduled to meet Oct. 28 and 29, and its policy officials are divided aboutย whether to cut rates in the coming months, or keep them higher to tame inflation. […]
The shutdown threw the Fed’s plans into turmoil, according theย Federal Open Market Committeeย transcripts. The lack of information was among several factors that made Fed officials decide to hold interest rates steady at that meeting instead of raising them again, as it had indicated at its previous meeting.6ย The Fed also removed “forward guidance” from its official post-meeting statement.
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