The government shutdown continues. Many federal agencies have suspended or limited their operations. Some agencies, like the Bureau of Labor Statistics, produce data that the Federal Reserve needs to inform its decisions.
The Federal Reserve is set to meet on October 28 and 29, to discuss raising the federal interest rate, reducing it, or leaving it where it is: between 4 and 4.25%. But without any economic data, the Fed’s governors would be “flying blind.”
Wall Street experts predict that the Federal Reserve will lean towards reducing the rate. “The US government shutdown and associated data delays nudge what we judged was already a firmly odds-on Fed rate cut in October further odds-on,” says Krishna Guha, head of global policy and central bank strategy at Evercore ISI.
“The abrupt slowdown in the service sector is a warning flag and indicative that the Fed needs to continue to cut key interest rates,” says Louis Navillier, a renowned growth investor.
During the record-breaking 34-day partial government shutdown between 2018 and 2019, the Fed kept interest rates steady. But this complete government shutdown could be different.