The Fed lost access to critical employment data due to the government shutdown.
According to the Washington Post, Fed officials cannot access data from ADP, which provides private sector employment data.
This development creates additional difficulties for the Fed in making interest rate policy decisions, as it is currently unable to access much economic data due to the ongoing partial government shutdown in the US.
The uncertainty created by the lack of data also led to a sharp decline in cryptocurrency markets. Total cryptocurrency market capitalization fell 4.79% in the last 24 hours to $3.65 trillion. Bitcoin, meanwhile, fell 3.87% to $108,174.
The Fed’s interest rate policy has a decisive impact on market liquidity. Interest rate cuts provide more liquidity to the market and are generally interpreted as a bullish sign. Conversely, holding interest rates steady or raising them reduces liquidity and reinforces the bear trend.
Although the Fed cut interest rates by 25 basis points in mid-September, there was no significant rise in cryptocurrencies because this decision was already priced in by the markets.
Now, the Fed’s loss of another key data source could make it even more difficult to shape interest rate decisions. Fed Chair Jerome Powell has long been the subject of intense criticism from President Donald Trump. Trump recently stated, “There’s a real stubborn person at the Fed; interest rates are too high.”
The next Federal Open Market Committee (FOMC) meeting will be held on October 28-29. Markets are eagerly awaiting the Fed’s next action. While crypto markets currently anticipate no change in interest rates, uncertainty surrounding data flow is increasing the perception of risk in the economy.
*This is not investment advice.