"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."
"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. Yet should job gains pick up soon, the Fed may not detect the change."
"On Tuesday, payroll processor ADP released a new weekly measure of hiring by businesses, using payroll data from millions of clients. It shows that in late September and earlier this month, companies resumed adding jobs, after shedding workers in July and August. Still, a key reason rate cuts are so widely expected is that most Fed officials see its key rate, which is now about 4.1%, to be high enough that it is restraining the economy's growth."
The Federal Reserve is expected to cut its short-term rate for the second time this year amid growing economic uncertainty. A government shutdown since Oct. 1 has halted key economic releases, delaying September payrolls and potentially postponing October inflation and November hiring reports. The data loss raises the risk that the Fed could miss turning points in hiring or inflation while planning further cuts. Private payroll processor ADP's weekly measure shows companies resumed adding jobs in late September and early October after losses in July and August. Most Fed officials view the roughly 4.1% key rate as restrictive enough to permit additional reductions.
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