US data cutoff casts global shadow

World Bank, IMF say public’s trust at risk

- LEIKA KIHARA HOWARD SCHNEIDER

The IMF warned in its World Economic Outlook on Tuesday that the global economy is showing signs of strains from US tariffs and protectionism, even though it so far has held up better than expected.

(REUTERS)

The US government shutdown that has turned off the official flow of data could begin clouding the view for policymakers in Japan and other countries where insight into the fortunes of the world’s biggest economy informs the outlook for their own currencies, trade performance and inflation.

What happens in America, in other words, doesn’t stay in America, and global officials say being left data-blind by the shutdown over time could complicate their own policymaking and boost the risk of a mistake ata moment when countries are already adjusting to the Trump administration’s efforts to remake global trade.

“It’saserious problem. We hope this gets fixed soon,” Bank of Japan Governor Kazuo Ueda told a news briefing on Oct 3, as he discussed the hurdles the Bo] faces in deciding when to resume interest rate hikes.

Another Japanese policymaker went further.

“It's a joke. [Federal Reserve Chair Jerome] Powell keeps on saying the Fed’s policy is data-dependent but there’s no data to depend upon,” said the official, who declined to be named as he was not authorised to speak publicly.

Bank of England policy member Catherine Mann said the questions surrounding US data, the controversy over the Fed’s independence, and other issues don’t figure as directly into BoE policy debate as the shifts in trade policy, for example, which directly affect things like prices and the export outlook.