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Fed Faces Uncertainty as US Shutdown Clouds Economic Data
16 Nov
Summary
- Fed minutes to be released as investors unsure about US interest rates
- US government shutdown delayed key economic data, leaving Fed with incomplete picture
- Boston Fed president casts doubt on further rate cuts in near term
As the Federal Reserve prepares to release the minutes from its October meeting on Wednesday, investors are growing increasingly uncertain about the path of US interest rates. Last month, the Fed lowered its benchmark rate to a range of 3.75% to 4%, but investors were left disappointed when central bank chair Jay Powell hinted that a further reduction in December was not a foregone conclusion.
The uncertainty has been compounded by the recent 43-day US government shutdown, which halted the release of key data on the labor market and inflation. This has left the Fed with an incomplete picture of the economy, according to analysts at Morgan Stanley. Boston Fed president Susan Collins has further cast doubt on the possibility of additional rate cuts in the near term, arguing that there is "a relatively high bar for additional easing."
The Fed's decision-making process in December will be closely watched, as the central bank seeks to navigate the economic uncertainty caused by the government shutdown. Investors will be hoping for more clarity on the Fed's plans for interest rates in the coming months.
