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Fed Steers Through Economic Uncertainty Lacking Crucial Data, Divisions Arise Over Interest Rate Direction

Fed Steers Through Economic Uncertainty Lacking Crucial Data, Divisions Arise Over Interest Rate Direction

Bitget-RWA2025/11/21 21:10
By:Bitget-RWA

- The Fed faces a data gap ahead of its December meeting due to canceled/delayed October CPI and employment reports from the 43-day government shutdown. - Officials debate rate cuts amid conflicting priorities: inflation control vs. labor market risks, with some advocating cuts and others warning of "largely balanced" conditions. - Key indicators like weekly unemployment claims (1.957M) and ADP job losses highlight rising labor pressures, though pre-shutdown data shows 4.3% unemployment in August. - The da

The Federal Reserve is contending with a major lack of data as it approaches its crucial December policy meeting, after the 43-day government shutdown led to the postponement or cancellation of key economic reports—including the October consumer price index (CPI) and employment figures.

that the October CPI would not be released as planned, depriving the Fed of a vital measure of inflation ahead of its December 10 decision. The agency explained that collecting survey responses retroactively during the shutdown proved too difficult, with to be published on December 18—after the Fed's meeting. In a similar vein, , now due November 20, will not provide updated insights on the labor market for October and November before the central bank meets.

This information gap has heightened uncertainty for Fed officials, who must balance inflation concerns with signs of a cooling job market. Policymakers have voiced unease about making decisions in a "data fog," with Chair Jerome Powell stressing the need for prudence. "If you're driving in foggy conditions, you slow down," Powell remarked following the October meeting, highlighting the necessity of caution when data is incomplete

. Still, a willingness to consider additional rate reductions, noting the Fed has "space for further adjustments in the near future."

The split among Fed members mirrors broader disagreements about the direction of the economy. Christopher Waller, a strong supporter of lowering rates, advocated in a November address for continued cuts to bring monetary policy closer to neutral, while

the October rate reduction, pointing to a "mostly balanced" job market and ongoing inflation. The absence of up-to-date statistics has deepened these divisions, with some officials prioritizing inflation management and others focusing on the threat of a weakening labor market.

Labor market signals further muddy the waters.

to 1.957 million for the week ending October 18, up from 1.916 million in early September, indicating increased unemployment pressures. also revealed an average weekly loss of 2,500 jobs in late October, highlighting weaker hiring activity. In the absence of new data, the Fed must depend on figures from before the shutdown, which at a near four-year peak of 4.3% in August.

The outcome of the December meeting will depend on whether delayed reports—such as the September jobs data and weekly unemployment claims—point to a stabilizing or deteriorating labor market. A sharp rise in unemployment would make a rate cut more probable; if the job market remains steady, officials may decide to keep rates unchanged. Regardless, the lack of October CPI and employment numbers makes it much harder for the Fed to fine-tune policy in a fast-changing economic landscape.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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