Partial Closing the US government Most likely, it will affect the domino on the next decision on the interest rate of the US Federal Reserve System, economists say, and Canada can also see how the impact causes.
The work of many American agencies stopped, and hundreds of thousands of employees were condensed, starting from midnight on Wednesday after the lawmakers could not reach a short -term financing agreement.
Among the victims are statistical agencies, including the United States Bureau of Labor Statistics Bureau and the US census bureau, on the economic data of which the American Central Bank relies in order to decide whether to change its basic interest rate.
If the stop is preserved, the economists agree that the lack of data that underestimates that the Fed will remain stable, despite the fact that they will encounter intensive political pressure in order to continue to reduce against the background of growing economic uncertainty.
This will have consequences north of the border, said Gary Khufbauer, senior researcher, non -resident at the Institute of International Economics of Peterson.
“If interest rates in the United States are not reduced in October by 25 basic points, this will certainly affect Canadian interest rates,” he said in an interview.
The Bank of Canada and the US Federal Reserve must announce its relevant decisions on the interest rate on October 29 after the consideration of the latest internal and global economic data.
Both central banks delivered their first reduction in bets For several months on September 17, although US Federal Reserve has been waiting for 2024, to spit 25 basic points from its rate.
The American rate remains much higher – by 4.15 percent – than the current political rate of Canada Bank at 2.5 percent. This was angry with US President Donald Trump, who called on the Fed radially reduce bets in order to increase the economy.
Fed's chairman Jerome Powell indicated That inflation in the United States remains stubbornly high by 2.9 percent, and outside the target range of the Central Bank, while unemployment is also growing. Powell also said that Trump's global tariff policy continues to increase greater economic uncertainty.
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The level of inflation in the United States is also higher than in Canada, which is currently 1.9 percent.
The timing of the government “not ideal for the Fed”, wrote RBC economists Mike Reid and Carrie Frostone. Note on FridayBecause “we will not receive the initial data on homeless claims on Thursday, nor data on employment from non -living wages or a survey of households on Friday.”
If the shutdown lasts until October 15, economists warn, there is a “non -equal risk” that the Fed will not receive the latest consumer price index until its meeting on October 29.
Derek Holt, vice president and senior economist at Scotiabank, warned similarly in His own analysis on Friday The fact that “several other indicators, such as claims, construction costs and factory orders,” will also be laid from a long shutdown, leaving markets and the Fed guesses the state of the US economy.
“The thinking of the Fed’s reaction is to steadily adhere to the interest rate in the absence of reliable information about the state of the labor or inflation market,” said Werner Anweiller, an international professor of economics at the University of British Colombia, in an electronic letter.
“The result may be that a monetary policy can be in accordance with the economic realities of the US economy.”
According to Khufbauer, the decisions of Canada Bank at the interest rate are also taken into account by US economic data and other main world markets, which can also lead to freezing.
Tariffs are not affected, but travelers could see delays
One of the aspects of the economy, which will not affect the stop, will be a collection of income from US tariffs.
A plan of unforeseen circumstances for the US Department of Internal Security, Published online MondayHe says that the US Customs and Border Defense Collection (CBP) will be considered an important service in case of disconnecting.
CBP agents, entrusted to border law enforcement, and official transitions of the state will also be exempt from vacation or dismissal, according to the plan, although they will have to work without payment, until the disconnection is completed and cannot be provided.
According to the plan of unforeseen circumstances, most of the almost 272,000 national security officers will continue during a stop, including more than 63,000 CBP employees.
The federal stop of work may affect Travelers who may encounter longer lines in American airports and closing in US national parks, since only the main employees will continue.
Antterweiler said that the economic influence of the state shutdown on Canada can grow, the longer it is delayed.
“The last six to seven weeks we have been fond of the new territory, and the US economy could and probably somewhat weakened,” he wrote. “This means that the demand for Canadian goods may suffer, especially if the procurement from the US government is directly involved.”
He added that the situation will aggravate if the Trump administration leads to a reduction in federal labor, and not temporarily releases employees. This will increase the level of unemployment and will further affect the data presented in the federal tank.
The last time the US government approached the closureIn 2023, economists said that a long -term closure would download confidence in the investor and consumers on both sides of the border.
The difference this time, as economists note, is that Canada is already leaving the United States for trading and investments against the background of Trump’s trade war, which makes American instability less factor.
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