Hurricanes are coming one after another! This time, it's hard for the Federal Reserve to ignore?

In recent weeks, two devastating hurricanes attacking the southeastern United States will make it more difficult for the Federal Reserve to assess the economic situation. However, analysts expect the Fed to continue cutting interest rates by 25 basis points at the beginning of next month. James Knightley, Chief International Economist at ING, said, "Weather conditions make policy-making very challenging and prove that caution is reasonable." But he added that a 25 basis point rate cut is possible. Some economists have formed their views based on a recent speech by Fed Chairman Powell, in which he hinted that the baseline expectation is to continue cutting rates by 25 basis points in the future. Knightley said, "Unless circumstances change, we believe they will indeed take this path." In the past, the Fed has often ignored temporary supply shocks caused by natural disasters. When Hurricane Katrina hit the Gulf Coast of the United States in 2005, the Fed "talked a good game about the hurricane's destruction, but continued to raise rates by 25 basis points at every meeting," said Samuel Tombs, Chief Macroeconomist at Pantheon Macroeconomics. However, Diane Swonk, Chief Economist at Grant Thornton, pointed out that the increasing frequency and severity of recent natural disasters mean that the Fed is finding it increasingly difficult to ignore them. After hurricanes, the number of initial jobless claims always surges. Hurricane Helen made landfall in Florida on September 26, and the first evidence of the damage caused by this hurricane is the initial jobless claims report. The latest report shows that the number of initial jobless claims has reached the highest level in over a year. Stephen Stanley, Chief Economist at Amherst Pierpont, said, "The impact of hurricanes is not uncommon for this season, but the extent of the damage caused by Hurricane Helen suggests that initial jobless claims will see a significant and lasting increase." Hurricane Milton, which hit Florida on Wednesday night, will bring another temporary increase in initial jobless claims. Tombs from Pantheon stated that the number of applicants may soar to around 270,000 before declining. The effects of these two hurricanes may not completely disappear from the data until mid-November. In addition, on November 1st, the U.S. will release the October nonfarm payrolls report, a week before the Fed's interest rate meeting. Oren Klachkin, an economist at Nationwide, said, "We believe that recent hurricane activity may reduce October's job gains by as much as 50,000." He said that due to the hurricanes and Boeing's strike, Fed officials will need to "exercise caution" with the next employment report. Nancy Vanden Houten, Chief U.S. Economist at Oxford Economics, said, the storm's impact "may last for weeks," and the October nonfarm payrolls report may be "significantly affected." Regardless, Federal Reserve officials have become accustomed to occasional disturbances in economic reports, "We usually can figure out what these impacts are," said Richard Moody, Chief Economist at Regions Financial. Vanden Houten and Moody also expect the Fed to cut rates by 25 basis points in November, despite CPI data released this week coming in higher than expected. Economists suggest that the details of the CPI report do not indicate that the pace of inflation is enough to deter the Fed from cutting rates by 25 basis points. Moody said, "They are more concerned about the labor market than inflation." Federal Reserve officials have hinted that they intend to continue lowering the benchmark interest rate, with Chicago Fed President Gulbis saying earlier: "I think we will gradually take action, the labor market has cooled to a sustainable level, and the Fed hopes to maintain this level."