US Government Shutdown Leaves Fed Navigating Interest Rate Decisions Blindly

The US government shutdown, now in its eighteenth day, has furloughed most public employees except those in critical roles. This disruption has suspended key economic reports, including the ADP employment data and delayed SEC decisions on ETFs. The Federal Reserve faces heightened uncertainty as it prepares for its upcoming interest rate decision at the end of October.

Critical inflation data, originally scheduled for release this week, remains in limbo. If the shutdown ends, the Department of Labor may publish the figures by October 24—just in time to inform the Fed's deliberations. Market expectations for a rate cut have strengthened amid signs of employment weakness, but without this data, policymakers are effectively flying blind.

Chair Powell acknowledged the challenge of setting monetary policy without access to vital economic indicators. The situation underscores how political gridlock can Ripple through financial markets, leaving investors to parse fragmented signals.