Fed Faces Rate Decision Challenges: Incomplete Data Deepens Policy Disagreements

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Fed Faces Rate Decision Challenges: Incomplete Data Deepens Policy Disagreements

Bitget-RWA2025/11/15 10:44

By:Bitget-RWA

- U.S. government shutdown disrupted key economic data, delaying Fed's rate decision amid inflation and employment uncertainty. - Fed officials split: Collins and Bostic oppose December rate cuts due to persistent inflation, contrasting with Miran's growth-focused stance. - Market uncertainty rises as CME FedWatch shows 68% chance of 25-basis-point cut, with financial stocks reflecting volatility. - Shutdown reduced Q4 GDP by 1.5pp, while delayed data risks flawed policy decisions and impacts consumer borr

The U.S. economy is approaching a crucial crossroads next week as it deals with the consequences of a two-month government shutdown and growing disagreements within the Federal Reserve regarding interest rate decisions. With the first non-farm payrolls report since the shutdown about to be published, both policymakers and investors are uncertain if the Fed will proceed with a third rate reduction at its December session.

Fed Faces Rate Decision Challenges: Incomplete Data Deepens Policy Disagreements image 0

The shutdown has interrupted the release of essential economic indicators, such as October’s employment and inflation statistics,

depriving the Fed of vital data

needed to assess the nation’s economic condition.

Both the White House and Congressional leaders have admitted that the jobs and consumer price index (CPI) figures for October might never be fully published,

since the Bureau of Labor Statistics

and other departments were unable to finish their surveys during the shutdown period. Many economists are calling on the Labor Department to make the release of November’s numbers a priority, so the Fed can have up-to-date information for its December policy review

as reported by Reuters

. Without current statistics, the Fed faces the risk of making policy choices based on partial or obsolete information,

a situation that has already postponed

its evaluation of inflation and employment patterns.

Within the Fed, internal disagreements are becoming more pronounced. Boston Fed President Susan Collins and Atlanta Fed President Raphael Bostic have publicly spoken against a rate cut in December, pointing to persistent inflation and a robust economy. Collins highlighted the difficulties of setting policy when reliable data is lacking,

noting, "It will likely be appropriate"

to maintain current rates for an extended period amid significant uncertainty. Bostic also expressed worries about inflation, cautioning that businesses are planning price increases in 2026, indicating ongoing inflationary challenges. Their perspectives differ from those of officials like Fed Governor Stephen Miran, who believe that the recent inflation surges are temporary and that rate reductions are still needed to support economic growth

according to Finance-Commerce

Market volatility has increased as the Fed’s lack of consensus leaves investors uncertain. The CME FedWatch Tool

assigns a 68% chance

of a 25-basis-point rate cut in December, with the possibility of a pause until 2026. Financial sector stocks have mirrored this instability,

with declines seen in banks and insurers

amid the ongoing unpredictability. Meanwhile, the minutes from the FOMC’s October meeting,

scheduled for release next week

, may provide more insight into the committee’s differing viewpoints.

The wider economic effects of the shutdown continue to be felt.

The Congressional Budget Office has projected

that the shutdown will reduce fourth-quarter economic growth by 1.5 percentage points, due to its disruption of government functions and data reporting. The delay in official economic releases has also forced private organizations to attempt to fill the information gap, though the reliability of their data is uncertain. The Fed’s upcoming rate decision will not only steer monetary policy but also affect consumer borrowing expenses,

as reflected in the slight drops

in home equity loan rates following previous rate cuts.

As the Fed maneuvers through these challenges, its December meeting will be a crucial test of its ability to manage inflation while supporting economic stability. The results of this meeting could influence the direction for 2026, especially as Fed Chair Jerome Powell’s term is set to end in May 2026

as noted by Seeking Alpha

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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