Federal Reserve's Quarles: Lack of Reliable Inflation Data Calls for Caution in Rate Cuts

November 6th: Quarles of the Federal Reserve stated on Thursday that the absence of official inflation data during the government shutdown "further emphasized" his cautious attitude towards further interest rate cuts. Quarles said in an interview, "My inclination is that when the current situation remains highly uncertain, we should be more cautious and slow down." Quarles pointed out that the Fed can still obtain various private data on the labor market, including the biweekly unemployment rate estimate newly launched by the Chicago Fed. The latest data indicates that the October unemployment rate may rise to 4.4%, which is the highest level in four years. He stated that this estimate and most other labor market indicators show that "the labor market remains quite stable." "If the labor market begins to deteriorate, we can almost immediately notice signs." However, he also mentioned that alternative data sources for inflation are very limited. Before the government suspended the release of economic data, statistics showed signs of rising inflation. He said, "If there is a problem with inflation, there will actually be no corresponding observed data to reflect it, which makes me more cautious about preemptive rate cuts."