Government Shutdown Looms: The Fed's Blind Interest Rate Decisions and Washington's Shutdown Season

A potential government shutdown could hinder the Federal Reserve's ability to raise interest rates in November, as it would limit access to key inflation data from unfunded agencies such as the departments of Labor and Commerce. Bank of America suggests that if the shutdown lasts for a month or more, the Fed would be "flying blind" at its November meeting and may need to stay on hold. While markets already believe the Fed is done with rate hikes, Bank of America expects one more hike, contingent on the duration of the shutdown and inflation trends.