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The irony is rich: The U.S. Federal Reserve is about to walk into its next policy meeting in late October — scheduled for Oct. 28–29 — with less and less reliable information. The U.S. government shutdown has already halted the publication of critical data, including labor statistics, consumer-price index releases and more. At precisely the time when timely economic insight matters most, the Fed — and, by extension, markets — are being forced to navigate in the dark.
In a perceptive statement, Fed governor Stephen Miran stressed on Oct. 3 that shifts in policy should be founded on current availability of data — i.e., monthly jobs and inflation data. He repeated his earlier position that the “neutral interest rate” is above zero — contrary to some models which assume it to be close to zero — and suggested that cuts could be less steep or more fine-tuned than consensus expectation. Dovish but cautious, Miran makes a case for cuts, but not without clarity.
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