Long shutdown could imperil the CPI inflation report and render the Fed partly blind
The U.S. labor market has taken a turn for the worse since the late spring, spurring the Fed to cut interest rates a few weeks ago for the first time this year. At the same time, inflation has crept higher, and the Fed has to be mindful of that as it weighs when to lower borrowing costs again.
The economy is already struggling to adapt to ever-changing U.S. tariffs, for one thing. Businesses have also cut back on hiring and investment, causing the labor market to weaken and keeping consumer confidence low.
“The risk of slower growth stems from reduced visibility into the economy in an already uncertain period, and less so from the shutdown itself,” the RBC economists said.