The direct hit to the economy from even an extended government shutdown beginning next week would be modest. But it could also result in delays to key data releases, including the September employment and CPI reports due over the next couple of weeks. At a time when the Fed is already sounding uncertain about the near-term policy outlook and has pledged to take a data-dependent approach, a prolonged shutdown would therefore reinforce our view that further rate hikes this year are unlikely.
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