Government data blackout is fueling the Fed's rate cut rift

""If you ask me, could [the absence of data] affect the December meeting?" Powell said last week in his news conference. "I'm not saying it's going to, but, yeah, you could imagine that." "What do you do if you're driving in the fog? You slow down," he said. "I don't know how that's going to play into things. ... But there's a possibility that it would make sense to be more cautious about moving. ... I'm not committing to that; I'm just saying it's certainly a possibility that you would say, 'We really can't see, so let's slow down.'""

""This fog story has just got to stop," Fed governor Christopher Waller said Friday on Fox Business. "The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and that's the right thing to do with policies - to continue cutting.""

"As Krishna Guha and his colleagues at Evercore ISI put it in a note, "reasoning by metaphor depends on the metaphor.""

The Federal Reserve faces a decision on whether to cut interest rates next month amid limited government data. Chair Jerome Powell suggested that absent data could justify extra caution, likening policy pacing to slowing when driving in fog. Some policymakers rejected the fog metaphor and urged continued rate cuts, arguing uncertainty does not warrant stopping policy action. The committee's hawkish wing appears inclined to use missing data to justify more cautious action because inflation remains elevated. Available indicators point to an economy evolving roughly as expected before the shutdown. Metaphor-driven reasoning can influence policy direction depending on the chosen metaphor.

Read at Axios