In the aftermath of the US government shutdown, the possibility of a Fed interest rate cut becomes a fait accompli

With signs that the US federal government shutdown will be prolonged, speculation has been raised that the possibility of the Federal Reserve (Fed) cutting interest rates further is virtually certain.
According to FedWatch, a market research firm based in Chicago Mercantile Exchange (CME) Group, as of 3 p.m. on the 1st (local time), the market was at the Federal Open Market Committee (FOC) meeting in October.
MC) We are pricing in a 100% chance of a rate cut at the meeting and an 88% chance of another rate cut at the December meeting, which is higher than it was right after the shutdown began.
"Government shutdowns and delayed economic data releases further increase the likelihood of an October rate cut," Krishna Guha, global head of policy at Evercore ISI, said in a client note.
"The Fed is facing a slowdown in the labor market, which is likely to take precedence over inflation concerns," he said.
At the time, the majority of committee members predicted one more rate cut this year, but a minority predicted the need for two rate cuts.
Bank of America said, "It's likely the shutdown will end before the FOMC meeting on October 28-29, but if it continues, the Fed will likely lower interest rates as a risk management measure."
In particular, if the September employment index is not released, there is ample room for Chairman Powell to call for an additional rate cut, according to the analysis.
The Congressional Budget Office (CBO) estimates that for each day the government shutdown lasts, approximately 750,000 people will be laid off, resulting in a total wage loss of $400 million.
In the past, government employees have received retroactive pay after returning to work, but President Donald Trump has suggested he may permanently cut some furloughed workers.
On the same day, the private employment research company ADP announced that private sector employment fell by 32,000 in September, indicating a slowdown in employment in the United States.
The Bureau of Labor Statistics (BLS) official employment index is expected to be delayed if the shutdown continues.