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Fog of data uncertainty ahead of Fed's crucial rate call
As the United States emerges from the longest government shutdown in modern history, the Federal Reserve faces a daunting new challenge: Steering monetary policy through a fog of missing data. With key economic indicators delayed or suspended, including October’s all-important consumer price index, the central bank finds itself navigating blind ahead of its next rate decision in mid-December. For Chair Jerome Powell and his colleagues, the absence of timely inflation and employment figures complicates an already delicate balancing act. After beginning a cautious rate-cutting cycle in September, the Fed must now determine whether to continue easing or pause, even as conflicting signals from financial markets and global headwinds cloud the outlook.Data Blackout at a Critical JunctureOrdinarily, policymakers would be scrutinising a full suite of economic data, ranging from consumer prices to wage growth and retail sales, to assess inflation dynamics and household demand. But with the Bureau of Labor Statistics and the Commerce Department shuttered throughout October, those numbers remain out of reach. The result is a fog of war settling over the central bank just weeks before its December Federal Open Market Committee
Outlook
Minutes: Fed remains split over path of rate cuts
Federal Reserve officials remained divided at their October policy meeting, with minutes released on Wednesday showing disagreement over whether weakening labour conditions or persistent inflation posed the bigger threat to the United States economic outlook. The Federal Open Market Committee ultimately approved a quarter-point cut at the meeting, lowering the federal funds rate to a range of 3.75%-4%. Yet the path ahead looks increasingly uncertain. The minutes revealed that officials were split on the need for additional easing in December, a move markets had been widely expecting, with many stating that no further cuts would be required at least through 2025. “Several participants assessed that a further lowering of the target range for the federal funds rate could well be appropriate in December if the economy evolved about as they expected over the coming intermeeting period,” the minutes said. However, “many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year”. The divide echoed comments from Chair Jerome Powell at his post-meeting press conference, where he said a December cut was not a “foregone conclusion”.
Outlook
Economic data may not be released due to US shutdown
The White House said Wednesday (Thursday AEDT) that key economic data for October may not be released because of the United States government shutdown. While the shutdown is coming to an end, White House press secretary Karoline Leavitt told reporters that it could have long-lasting effects on the government’s data collection. “The Democrats may have permanently damaged the Federal Statistical system with October CPI and jobs reports likely never being released,” Leavitt said. “All of that economic data released will be permanently impaired, leaving our policymakers at the Fed, flying blind at a critical period.” This comes as the Bureau of Labor Statistics was largely idle during the 40-plus-day shutdown, apart from temporarily recalling some staff to ensure the September consumer Index was released in time to set the Social Security cost-of-living adjustment for next year. As a result, the agency was unable to collect price data and employment information for its closely watched releases. Economists fear that doing so retroactively would lead to flawed data due to so-called recall bias and the difficulty people have recalling past events. While the job numbers for September are yet to be released, the data w
Outlook
Bostic to retire from Atlanta Fed; Trump eyes influence
Atlanta Federal Reserve President Raphael Bostic announced on Wednesday that he will retire at the end of his current term on 28 February, 2026, an unexpected move that comes as President Donald Trump pushes to assert more influence over the United States central bank. Bostic, the first Black and openly gay individual to lead one of the Fed’s 12 regional banks, has been a prominent voice on issues of economic equity and social inclusion. His departure adds to the shifting landscape within the Federal Reserve as Trump seeks to remake the institution’s leadership, including through the attempted dismissal of Governor Lisa Cook and the upcoming decision over a successor to Chair Jerome Powell when his term ends next spring. While Trump does not directly appoint regional Fed bank presidents, such appointments must be approved by the central bank’s Board of Governors - a body he is attempting to reshape. The President has been sharply critical of the Powell-led Fed, accusing it of being too slow to lower interest rates and stimulate the economy. Bostic’s planned exit marks the second departure this year of a hawkish policymaker, narrowing the group of voices urging restraint on further rate cuts. The Fed has reduced i
Outlook
US Fed governor favours half-point rate cut in December
With inflation cooling faster than expected and the jobs market showing clear signs of strain, Federal Reserve Governor Stephen Miran has made it clear he’s ready to push for a third consecutive interest-rate when policymakers meet in December. Speaking to CNBC on Monday, Miran argued that the economic data—limited though it is due to the ongoing government shutdown—still supports a half-point reduction in interest rates next month. But due to better-than-expected inflation data and signs of continued weakness in the job market, Miran believes the Fed should be moving at an even more rapid pace than its traditional quarter percentage point reductions. At the previous two Federal Open Market Committee meetings, Miran argued for a 50 basis point, or half percentage point, reductions. Having consistently pressed for a quicker pace of easing, Miran reiterated his stance that the Fed needs to act decisively to stave off a potential economic softening ahead. “Nothing’s guaranteed,” he noted, “and new data could always shift my outlook. But based on what we know, a half-point cut remains the right call—if not that, then at least a quarter.” Despite his calls for bolder moves, the Federal Open Market Committee (FOMC) ha

Outlook
Could the IMF's global growth warning turn into reality?
The International Monetary Fund reckons global growth will slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. What's driving that deceleration matters as much as the numbers, especially when you consider the risks that could make it worse - and several are now materialising. The IMF's mid-October World Economic Outlook report stated "the rules of the global economy are in flux", with uncertainty about stability remaining acute despite tariff deals that have tempered some extremes since the U.S. introduced higher levies back in February. The report's outlook has advanced economies forecast to grow just 1.5% in 2025-26, with the U.S. cooling to 2%, while emerging markets are tipped to grow just above 4%. World trade volume growth is expected to hit 2.9% in 2025-26 - well off 2024's 3.5% clip.What drove the flux in OctoberJust days after the IMF's mid-October World Economic Outlook warned about China's rare earth export controls, Trump and Xi struck a deal that suspends those controls for a year. That's one threat temporarily off the table, but AI stocks are repricing, labour force shocks are accelerating, and fiscal vulnerabilities are worsening exactly as the IMF warned. Primarily, it was President Trump's swee
Outlook
No Cup Day cut; RBA to hold fire amid rising inflation
The Melbourne Cup may be the horse race that stops a nation, but tomorrow’s glamour event on Australia's racing calendar is unlikely to coincide with a much anticipated Reserve Bank (RBA) interest rate cut following revelations that the inflation genie has not been adequately corked. What’s likely to have taken a rate cut well out of contention is the revelation that inflation for the September quarter was up 1.3%, taking annual inflation to 3.2%. According to the ABS, this is the largest rise since March 2023, with electricity the greatest contributor at 9%. While food and non-alcoholic beverages annual inflation was 3.1% for the September quarter, other rises include housing at 2.5%, recreation and culture at 1.9% and transport at 1.2%.Trimmed mean and CPI upWhat’s more meaningful for the RBA board is the trimmed mean – a measure of underlying inflation - which was also up by 3%, from 2.7% for the June quarter. This is the first time the trimmed mean annual inflation has increased since December 2022. What will also play on the minds of the RBA monetary policy board when it meets tomorrow will be the September 2025 monthly CPI indicator, which rose 3.5% in the 12 months to September, up from 3% in the 12 months
Outlook
Scope Ratings downgrades US credit amid fiscal concerns
Citing Washington’s drawn-out budget standoff, ongoing fiscal deterioration and declining governance standards, European credit rating agency Scope Ratings has downgraded America’s credit rating by one notch. The Berlin-based agency has cut both the United States local and foreign currency long-term issuer and senior unsecured debt ratings from AA to AA-, two notches lower than those assigned by the biggest peers, Fitch, Moody’s, and S&P Global. The downgrade follows the partial U.S. government shutdown on October 1, triggered when lawmakers failed to reach a funding agreement before the 30 September end of the fiscal year. But well before the government shutdown, the U.S. had already been struggling to maintain its high credit rating. The decision by Moody’s to downgrade in May this year saw the country lose its last remaining top credit score among the big three rating firms. Moody lowered the U.S. credit assessment to Aa1 from Aaa, matching Fitch and S&P Global in placing it below the top-tier triple-A category. At the time of Moody’s downgrade, the rating agency attributed the change to its deepening concern over the nation’s ballooning debt and deficits. “While we recognise the US’s significant economic
Outlook
Powell hints at end to balance sheet runoff
Federal Reserve (Fed) Chair Jerome Powell revealed to the market yesterday that the central bank is on the cusp of ceasing to reduce the size of its bond holdings and gave clearer hints about the likelihood of more interest rate cuts. Offering clarity on where the Fed sits on quantitative tightening - to reduce the more than US$6 trillion of securities it holds on its balance sheet – Powell indicated that the Fed is nearing its goal of “ample” reserves available for banks. While the central bank chief did not provide specific guidance on a path lower, his comments about weakness in the labour market suggest easing is firmly on the table. “Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,” said Powell. “We may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision.” Taking a Goldilocks ‘just right‘ approach, Powell told delegates to a National Association for Business Economics conference in Philadelphia yesterday that while moving too quickly may leave the inflation job unfinished, by moving too slowly, there may be unnecessary and painful losses in the empl