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Why is the Fed rate decision delayed?
The delay in the Fed's rate decision is mainly due to the US government shutdown, which has halted the release of crucial economic reports like employment and retail sales data. Without this data, the Fed cannot fully assess current economic conditions, making it difficult to decide whether to raise, lower, or hold interest rates.
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How does the government shutdown affect economic data?
The government shutdown stops the release of key economic indicators, including jobs reports and retail sales figures. This creates gaps in the data that policymakers rely on to gauge inflation, employment, and overall economic health, leading to delays in decision-making and increased uncertainty.
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What could missing data mean for markets?
Missing or delayed economic data can cause market volatility because investors lack clear signals about the economy's direction. Uncertainty may lead to cautious trading, and if the data gaps persist, markets might react more sharply once the information is finally released.
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Will the delay impact future rate hikes?
Yes, the delay could influence future rate hikes because the Fed relies heavily on recent economic data to make its decisions. Without up-to-date information, the Fed might adopt a more cautious approach, potentially postponing or adjusting its planned rate changes until clarity is restored.
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When will the missing data be available?
The missing data, such as employment and retail sales reports, is expected to be released once the government shutdown ends. The next scheduled key report is due around mid-October, but the exact timing depends on how quickly the government resumes normal operations.
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Could prolonged data delays hurt the economy?
Prolonged delays in economic data can hinder the Fed's ability to respond promptly to changing conditions, potentially leading to less effective policy decisions. This uncertainty might also affect consumer and business confidence, impacting economic growth in the longer term.