Dem
47
GOP
53
Normally the Fed governors look at all the available data, stuff it into their models of the economy, and decide what to do with interest rates. That wasn't possible at yesterday's meeting of the Fed board of governors. First, Donald Trump fired the longtime head of the nonpartisan Bureau of Labor Statistics, Erika McEntarfer, in August, because he didn't like the numbers the Bureau was producing and wanted a toady who would produce numbers he liked. He nominated a replacement, E.J. Antoni, but he was so universally panned, Trump had to withdraw the nomination. So BLS doesn't have a proper head to make sure all the data is collected properly and the numbers published are correct.
Second, the shutdown has stopped a lot of the raw data collection, so the Fed really doesn't have a good idea of how the economy is doing. Nevertheless, it cut rates by 0.25% yesterday and is hoping for the best. Inflation is starting to come back, but unemployment is also rising, so the Fed is flying blind here without good data. It is hard enough to get it right when there is data, but much harder when there isn't.
If Chair Jerome Powell & Co. are guessing wrong and inflation is a bigger problem than unemployment, cutting rates was the wrong thing to do because lower interest rates invariably increase inflation even more. That could hurt the Republicans next year. Powell noted that there were major arguments at the meeting, as not all the governors agreed on what to do. He also indicated that no one should make any assumptions about what the Fed will do at its December meeting. If the shutdown is continuing and there is no data at all, it is hard to imagine the Fed will know what to do. In that case, doing nothing might be the wisest course of (in)action. (V)