Monetary Policy Faces Fallout Amid U.S. Shutdown Risk... Labor Department Says October Jobs Report May Not Be Released

As the U.S. Congress has failed to pass a budget bill, the risk of a federal government shutdown-an official pause in operations-escalates on October 1. The Department of Labor has announced that, if a shutdown becomes reality, it will not be able to release key economic indicators. Since the jobs report scheduled for release four days later is a critical indicator that will directly influence the Federal Reserve's interest rate decision in October, concerns are mounting that the shutdown risk could heighten uncertainty in monetary policy.

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According to major foreign media outlets such as Bloomberg and CNBC on September 29 (local time), the Department of Labor stated in a 73-page contingency plan released on September 26 that "the Bureau of Labor Statistics (BLS) will suspend all operations" in the event of a shutdown, and "economic indicators scheduled for release during this period will not be released."

The Department of Labor performs a range of functions, but the release of economic indicators is the most sensitive area for investors. If a shutdown occurs, the weekly initial jobless claims scheduled for October 2 and the jobs report on October 3 may not be published. In particular, the jobs report is considered crucial for the Federal Reserve's monetary policy, as it recently cut its benchmark interest rate for the first time this year on September 17, citing a slowdown in the labor market. This has heightened concerns among policymakers and financial markets. The Federal Reserve is scheduled to hold its regular Federal Open Market Committee (FOMC) meeting on October 28-29 to discuss whether to implement an additional rate cut.

Meanwhile, the risk of a shutdown is rising as the U.S. Congress has failed to reach a budget agreement for the government after the 2025 fiscal year, which ends on September 30. If a shutdown occurs, federal employee pay will be suspended and some government functions will be paralyzed. Previously, on September 19, a temporary seven-week budget bill prepared by the Republican Party passed the House of Representatives but was rejected in the Senate. At least seven Democratic senators would need to support the bill for it to pass the Senate.

President Donald Trump is scheduled to meet with Democratic leadership this afternoon to negotiate the passage of a temporary budget bill. Senate Republican Leader John Thune told reporters that the Senate plans to hold another vote on the bill on Tuesday (the 30th) in an effort to avoid a government shutdown.

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