Key Inflation Report Cancelled Amid Government Shutdown Fallout
The United States will not publish official inflation data for October, creating significant uncertainty for policymakers at the Federal Reserve as they deliberate potential interest rate adjustments. The Bureau of Labor Statistics announced the cancellation of October's highly anticipated consumer price index (CPI) release, citing complications arising from the recent government shutdown.
The government shutdown, which was the longest in US history before concluding earlier this month, prevented the agency from collecting the necessary data. Officials stated they could not "retroactively collect" the information required to compile the comprehensive inflation report that financial markets and policymakers closely monitor.
Federal Reserve Navigating Economic Fog
The decision, announced on Friday, comes at a particularly sensitive time for the US central bank. Federal Reserve Chair Jerome Powell had previously described the challenge of steering economic policy without standard data as equivalent to "driving in the fog."
Powell emphasised the need for caution in these uncertain conditions, stating: "We're going to collect every scrap of data we can find, evaluate it and think carefully about it. What do you do if you're driving in the fog? You slow down."
Despite the data vacuum, expectations for another rate cut in December were bolstered by comments from John Williams, president of the Federal Reserve Bank of New York. Williams indicated on Friday that he still saw "room for a further adjustment in the near term" to interest rates.
Mixed Economic Signals and Political Pressure
The Fed finds itself in a complex position, balancing persistent inflation concerns against political pressure from former President Donald Trump, who had previously denied inflation remained elevated but has recently taken steps to address affordability issues.
The latest employment data from September presented a mixed picture for the American economy:
- 119,000 jobs were added during the month
- The unemployment rate increased to its highest level since 2021
- Growth estimates for preceding months were revised downward
The September jobs report itself was disrupted by the shutdown and released more than a month later than scheduled. While the complete October employment report will not be published at all, data on job creation and losses for that month will be included alongside the full November report - scheduled for release just one week after the Fed's next policy meeting.
The Federal Reserve had aggressively raised interest rates throughout 2022 and 2023 to combat soaring inflation, only beginning cautious reductions late last year. The absence of October's critical inflation data now complicates their decision-making process as they weigh further adjustments to monetary policy.
