No Jobs Data, No Fed Meeting? The Central Bank’s December Interest Rate Decision Just Got Harder

The Federal Reserve has a tough choice at its next policy meeting: cut borrowing costs to boost the job market, or keep them steady to fight inflation—but there’s a third option, which is not to have a meeting at all.

The Fed’s policy committee is scheduled to meet in December to decide whether to cut its key federal funds rate for a third time in as many meetings. However, crucial economic data about the health of the labor market from the Bureau of Labor Statistics was delayed by last month’s government shutdown, and is now scheduled to be published after the Federal Open Market Committee meeting.

Fed Chair Jerome Powell and other FOMC members have said the data blackout caused by the government shutdown is complicating their already difficult job of calibrating monetary policy to stabilize inflation and employment. That has experts speculating about whether the Fed will choose to simply delay its meeting by a week to get a look at the crucial employment report due Dec. 16.

“The Chair and others cited operating in a ‘fog’ without official government data,” researchers at UBS wrote in a research note. “If the FOMC sticks to a meeting schedule set in August 2024, knowing that key data would arrive a week later, that ‘fog’ would become a choice.”

Fed officials themselves have not publicly commented on whether the meeting could be postponed to gain further insight into the data. Fed spokespeople didn’t immediately respond to a request for comment.

The Fed’s Rock and Hard Place

A fundamental question for policymakers is whether the economy is at greater risk of mass layoffs or a surge of inflation. Recent economic data have raised concerns about price increases and a slowdown in the job market, both largely attributed to tariffs.

If inflation is the greater threat, the Fed could keep rates higher for longer. The Fed decided at its last two meetings to cut interest rates after employers steeply cut hiring over the summer, raising concerns that a surge of unemployment could be on the way.

The Fed’s policy committee is now divided about whether to prioritize fighting inflation by keeping rates higher or cutting them to support the job market. As of Monday, financial markets were pricing in an 83% chance of a rate cut in December, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

Job market data could shift that calculation strongly in one direction or another. And, as UBS’s researchers noted, the Fed has delayed or added meetings before; for instance, it delayed one as recently as 1974 to accommodate an international meeting, and in 1971 to avoid disruptions from anti-war protests.

And while Fed officials have frequently said data guide their decisions, much of that data won’t be available on the date their meeting is currently scheduled.

“With no hard data for October or November, the December meeting is shaping up to be more about vibes than evidence,” Bob Schwartz, senior economist at Oxford Economics, wrote in a commentary.