Governor Lisa Cook of the Federal Reserve will attend the upcoming October meeting following a significant ruling by the Supreme Court. As she herself put it, the court has ruled against former President Donald Trump’s effort to dump her from her job. This is a critical victory — not just for Cook, but for the Federal Reserve’s independence. The Supreme Court, meanwhile, has deferred further consideration of the case until January 2026. This ruling allows Cook to continue performing her job without fear of sudden, severe retribution.
This ruling could not come at a more important moment. Now looming is a government shutdown, which would almost certainly extend the release of important U.S. economic data. If the shutdown continues, federal workers might have to worry about actual layoffs, adding to the grim economic scenario. Assuming the government shutdown ends, we’ll get the U.S. labor market story next Friday. This report will provide important perspective on those trends with the most up-to-date employment figures.
Those policies are now colliding with a historic U.S. labor market that sends clear and conflicted signals. Even as hiring, by some measures, remains surprisingly robust, other indicators have marked a sharp turn toward a more tepid labor market. This fog for many economists deepens fears about the long-term stability of our national workforce. The Federal Reserve requires timely access to economic data in order to respond effectively. Sadly, that access is now threatened due to the shutdown.
In Japan, Tankan business survey results released this week found business conditions steady but elevated. Such stability makes it easier for the Bank of Japan to consider policy rate hikes. Taking that step now would be a big vote of confidence in the recovery from the Great Recession.
China has just released higher-than-expected PMI, showing a recovery in manufacturing activity. Analysts argue that one-off weather factors were responsible for much of the weakness in China’s economy over the summer. This effect might have obfuscated previous assessments of its economic state.
In Europe, the ECB has indicated that it too is done with rate cuts. That’s because core inflation across the euro area is still running at the EU’s preferred level of 2.3% YoY, according to recent Eurostat data. General inflation jumped to 2.2% y-o-y in September, up from 2.0% in August. Inflation is finally increasing, a trend that may influence the ECB’s long-term monetary policy stance. The new bank will face the same dilemma of ensuring growth without compromising price stability.
Economic uncertainties have recently increased across the globe. All eyes will be on the nonpartisan Congressional Budget Office’s updated economic forecast—and many other key indicators—once the current U.S. congressional impasse is resolved. The outcomes will likely shape monetary policy discussions within central banks worldwide, including those led by Governor Lisa Cook at the Federal Reserve.