U.S. Government Shutdown: A Cloud over Economic Projections

The recent U.S. government shutdown has added a layer of uncertainty to the country's economic forecast, according to S&P. As the shutdown persists, it poses a potential threat to economic growth, estimating a reduction of approximately 0.1-0.2 percentage points for each week of closure.

The interruption may also hinder the release of crucial economic data, which could in turn complicate the Federal Reserve's ability to plan its monetary policy. This delay could cause significant ripples in the decision-making process concerning interest rates.

S&P anticipates two further 25-basis-point rate reductions within this year and an additional 50-basis-point cut scheduled for 2026, showcasing the potential long-term impacts of the shutdown on the nation's economic strategies.

(With inputs from agencies.)