Jerome Powell, chairman of the US Federal Reserve, testifying at an open meeting held by the Fed in Washington, D.C. on Friday, October 24th, 2025. He answered questions on the future of interest rates. His remarks come at a time of significant economic headwinds. The current federal government shutdown has created an unprecedented lack of critical economic data. While Powell left the door open for potential rate cuts earlier this month, he emphasized a cautious approach moving forward.
Powell’s remarks on October 14 pointed in the direction of further rate decreases possibly being in play. He is expected to provide further clarity on this topic during a post-meeting news conference scheduled for Wednesday at 2:30 p.m. ET. We will use this news conference to outline the impact that this data blackout will have on future policy decisions.
Economic Climate and Pressure from the Trump Administration
As you probably have noticed, President Donald Trump has been all over the place this year. He’s pushing the Federal Reserve to make bold rate cuts to jump-start economic growth. His administration’s pressure comes at a time when many economists are expressing concerns about the labor market’s stability. Chicago Fed President Austan Goolsbee noted in a recent radio interview that data from August indicated a weakening labor market that may be “increasingly at risk of falling off a cliff.”
David Seif, chief economist for developed markets at Nomura, noted that financial markets are already projecting a rate cut by December. This expectation is bolstered by the CME FedWatch Tool. Last month the central bankers voted to initiate rate cuts for the first time since December. This is a big change in monetary policy as they respond to the economic turmoil created by the pandemic.
That uncertainty about when future rate cuts will occur is made worse by hold-ups in key government reports. The government shutdown has pushed the September jobs report’s release date back. Even the expected October jobs report, due out November 7, may be similarly delayed. Furthermore, the October Consumer Price Index (CPI), due out on November 13, may be in jeopardy of suspension if the shutdown persists.
“And if you’re not going to get the data, it’s just that much harder.” – Austan Goolsbee
Impact of Government Shutdown on Economic Data
The current government shutdown is posing unanticipated difficulties for the central bankers. They are ill-equipped to go about making policy decisions without having access to this known, necessary data. For example, the most recent inflation figures, the September Consumer Price Index, came out last week as per usual even in the midst of the shutdown. Lack of up-to-date labor market data adds another layer of challenges for policymakers.
Kathy Bostjancic, chief economist at Nationwide, remarked on the situation: “The Fed could conclude there’s so much uncertainty because of the lack of government data that it takes it slower with cutting rates than it normally would.” This emerging sentiment may explain why the Fed was so cautious in articulating its plan for future steps given the known lack or delayed reporting of key economic indicators.
Fed Governor Christopher Waller echoed this cautious mindset during his remarks, stating, “You don’t want to make a mistake, so the way to avoid that is to go cautiously or carefully and do [a quarter-point cut], wait and see what happens, and then you can get a better idea of what to do.” This is the kind of approach that matches Powell’s remarks over the past few months about trying to manage expectations in a turbulent economic environment.
Looking Ahead: Future Projections and Policy Decisions
In December, the Federal Reserve will again update their economic projections. These recurring updates will provide an informative glimpse into the Fed’s tentative roadmap going forward for both employment and inflation. Powell recently noted that “the outlook for employment and inflation does not appear to have changed much since our September meeting,” suggesting that stability remains a priority.
As central bankers consider their next moves, a world of potential further rate cuts awaits. That is still dependent on whether critical government data would be made public. That decision-making process will eventually depend on whether a fiscally constrained policymaker has the ability to accrue enough evidence to make their decisions strategically.