The Federal Reserve is expected to cut its short-term rate Wednesday for the second time this year despite an increasingly cloudy view of the economy it is trying to influence.
The government shutdown has cut off the flow of data that the Fed relies on to track employment, inflation and the broader economy. September’s jobs report, scheduled for release three weeks ago, is still postponed. This month’s hiring figures, to be released Nov. 7, will likely be delayed and may be less comprehensive when they are finally released. And the White House said last week that October’s inflation report may never be issued.
The data drought raises risks for the Fed because it is widely expected to keep cutting rates in an effort to shore up growth and hiring. Fed officials signaled at their last meeting in September that they would likely implement rate reductions in October and December, and financial markets now consider a cut in December to be a near certainty.
