Major News from the Federal Reserve Keeps Coming!

Due to the U.S. government shutdown, the September non-farm payroll report was not released as scheduled. Wall Street is concerned that the prolonged absence of key economic data could add uncertainty to the Federal Reserve's monetary policy path. According to the latest news, on October 3 local time, the U.S. Senate voted on the temporary funding bill proposed by the Democrats, which ultimately failed to pass with 46 votes in favor and 52 against. Subsequently, the temporary funding bill proposed by the Republicans also failed to secure enough votes, meaning the federal government will continue its "shutdown."

In addition, several Federal Reserve officials have been actively signaling important messages. Federal Reserve Governor Stephen Milan, in an interview on October 3 local time, continued to downplay the risk of tariffs driving up inflation. 2025 voting member and Chicago Fed President Austan Goolsbee stated that the Chicago Fed estimates the September unemployment rate should be 4.3%, indicating the labor market remains stable, and expressed caution about "front-loaded" interest rate cuts. Meanwhile, Federal Reserve Vice Chair Philip Jefferson warned that the Fed is facing dual challenges of a cooling labor market and rising inflationary pressures, complicating the monetary policy outlook.

According to CME's "FedWatch Tool," as of 06:30 Beijing Time on October 4, the probability of the Fed keeping interest rates unchanged in October is 5.4%, while the probability of a 25-basis-point rate cut is 94.6%. For December, the probability of keeping rates unchanged is 0.6%, with a 15.4% chance of a cumulative 25-basis-point cut and an 84.0% chance of a cumulative 50-basis-point cut.

Regarding the Federal Reserve's independence, on October 1 local time, the U.S. Supreme Court refused to allow President Trump to immediately remove Federal Reserve Governor Lisa Cook, who is suing to retain her position. This represents a setback to his efforts to exert greater control over the Fed. An order issued on October 1 means Cook can continue to serve in her role.