Powell: Government Shutdown Deprives Fed of Crucial Economic Data
Federal Reserve Chairman Jerome Powell highlighted concerns regarding the ongoing government shutdown’s impact on crucial economic data during a recent press conference. He noted that the uncertainty created by this situation could affect the central bank’s upcoming meetings, particularly the one scheduled for December 9–10.
Implications of the Government Shutdown
The current government shutdown has lasted five weeks, making it one of the longest in U.S. history. This has resulted in the absence of significant economic indicators that the Federal Reserve relies on to inform its decisions.
Fed’s Cautious Approach
During the two-day Federal Open Market Committee (FOMC) meeting, Powell emphasized the necessity for the Fed to proceed with caution. “If you’re driving in the fog, you slow down,” he stated, reflecting the uncertainty surrounding the economy.
Despite the incomplete data, Powell affirmed the central bank’s commitment to perform its duties. “We’re going to have to do our jobs one way or the other,” he remarked, projecting optimism that economic data would resume soon.
Interest Rate Cuts Amid Economic Concerns
The Federal Reserve announced its second interest rate cut of the year, a move intended to provide support for the labor market. This decision comes even as inflation continues to exceed the Fed’s target level.
- Interest rate cut aims to bolster labor market stability.
- Inflation remains above Federal Reserve targets.
Current Economic Conditions
Powell expressed the limitations of operating without complete data. He mentioned that official employment statistics for September are delayed, yet available information indicates low layoffs and hiring activity. He also noted a decline in perceptions of job availability among households and hiring difficulty among firms.
In summary, the Federal Reserve is facing a challenging landscape due to the government shutdown. As they approach their December meeting, the institution is focused on gathering whatever data is available and preparing to adapt to changing economic conditions.
