October jobs and inflation reports are canceled and November data are delayed until after the Fed’s Dec. 9-10 meeting. What this may mean for rates.

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The Federal Reserve will have to go without up-to-date government inflation and jobs data when it decides next month whether to lower interest rates for a third consecutive time.

The Bureau of Labor Statistics said on Nov. 21 it’s canceling the October inflation and jobs reports because the government shutdown prevented data from being collected. It’s also delaying the November jobs report to Dec. 16 from Dec. 5 and the inflation report to Dec. 18 from Dec. 10. Partial October data will be published with the November reports, BLS said.

Since both reports will now come after the Fed’s policy meeting on Dec. 9-10, the Fed will have to make an interest rate decision without government labor and price data for the last two months. The Fed at least had September inflation data before deciding on Oct. 29 to cut rates by a quarter percentage point.

“The Fed will be flying even more blind than it was last month,” said Michael Gregory, deputy chief economist at BMO Capital.

What does that mean for the Fed?

The Fed will have to rely on other data, like weekly state jobless claims, private payrolls reports from ADP and other firms or anecdotal evidence from the Fed’s Beige Book that covers all 12 districts of the Fed, when determining its next rate move in December, economists said.

“The Fed did this before, with the absence of the September (jobs) data for the October 29 meeting,” Gregory said.

At the time, Fed Chair Jerome Powell said, “I would say we’re not going to be able to have the detailed feel of things, but I think if there were significant or material change in the economy one way or another, I think we’d pick that up through this.”

Fed Governor Christopher Waller, recently an advocate for lower rates, pushed back last week on the notion the Fed didn’t have enough data to move on.

“While it is always nice to have more data, as economists, we are skilled at using whatever available data there is to formulate forecasts,” Waller said. The available data, he said, shows a soft labor market, tariffs having little lasting effects on inflation and inflation expectatons in check — all of which point to a rate cut next month.

BMO’s Gregory still sees a slightly higher chance for a rate cut than not but said December’s decision is riskier.

“Policymakers are going to have to employ two months’ worth of private sector and other surrogate data to fill in the labor market blanks for October and November,” Gregory said. “Having to fill in for two months’ worth of missing figures instead of one does lift the risk of misinterpreting the state of the labor market as defined by the official data. This should make some Fed officials more cautious.”

That echoes Powell’s comments after the October meeting. “If there is a very high level of uncertainty, then that could be an argument in favor of caution about moving,” Powell said.

What does this mean for a December rate cut?

Whether the Fed should lower rates again next month remains a tough call with Fed members already split, minutes from the last meeting showed. While “several” participants said another rate cut in December could be appropriate, “many” said no more rate cuts are necessary this year.

Comments last week from various Fed members continued to show divisions.

“Essentially with no new key economic data being released until after they meet, nothing will help change the current narrative,” said Jay Woods, chief market strategist at Freedom Capital Markets.

Of the 12 voting members, Woods sees a group of four leaning towards a rate cut. Among them, “New York Fed President John Williams made the most noise… (saying) he still believed the labor market equation of the mandate was more important now,” Woods said. The Fed has a dual mandate of promoting stable prices and maximum employment.

On the no-rate-cut side, “we have (Kansas City Fed president) Jeffrey Schmid who voted against a cut at the last meeting,” he said. “We also heard comments from voting member (and Fed Governor) Michael Barr who cited that inflation remained above the 2% target and is a concern. He also noted that the Fed should act with caution on further rate cuts.”

The annual consumer price index edged up to 3.0% in September from August’s 2.9%. The core rate, excluding the volatile energy and food sectors, also rose 3.0%, down from 3.1% the prior month.

Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee have also expressed concerns about inflation.

What do traders expect at the December meeting?

The CME FedWatch tool, which tracks the likelihood the Fed will change rates at each Fed meeting based on interest rate trading, shows about a 77% chance the Fed will cut rates by a quarter percentage point for a third consecutive time. The Fed lowered rates in September and October by a quarter point each time.

However, Gregory noted that the market’s odds have been all over the place, too. “It has been as low as under 35%,” he said. “For the Fed, it’s going to be a close call.”

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.