For the Fed, government closure may not be so bad after all

Failure to have the appropriate level of information allows officials to move away from major decisions as the market fears that President Jerome Powell and his cohorts will make a policy mistake.

"It suits them perfectly," said Joe LaVorgna, chief economist for the Americas at Natixis. "If you feel that the Fed is not supposed to do anything, closing down comes in. Without data, you do not have to make a decision." The default option is transparency. "

This was probably the option anyway, since the market was not expecting the Federal Open Market Committee to approve any rate hike this year.

However, members of the committee in their December projections indicated two likely increases, so there is still some doubt as to their potential date. There is also the open question of whether the Fed will slow down the pace at which it reduces the portfolio of bonds on its balance sheet.

"They would like to go for a few hikes, at least two or more, and to overcome that, you have to feel that things are going well," LaVorgna said. "It does not seem to be very likely."

Since it is unlikely that the FOMC will rise next week, investors will monitor every word of the post-meeting statement in search of clues about the future direction of the policy. They also intend to hear Powell himself at a press conference, as he embarks on a new media meeting policy after each meeting, not just every quarter as before.

What Powell will say is unknown, but it is unlikely that this statement will even mention the government deadlock.

When closing in October 2013, then-Fed governor, Mr. Powell, insisted to delete his mention at the FOMC meeting of the month, according to a transcript. The minutes that will be released three weeks after the next meeting will shed some light on how close the closure was in the minds of those in charge, but the closure of the government, which is already the longest in history, will probably have taken end.

But this may not prevent the Fed from using the lack of clear data as a justification for not approving an increase in March.

"Data is critical for business decision-making, for households and, of course, for decision-makers," said Fed Governor Lael Brainard at Marketplace. "So we certainly depend on it."