The Federal Reserve could proceed with another rate cut in December even if it remains “flying blind” due to the ongoing government shutdown delaying key jobs and inflation data, Bank of America said in a Tuesday note to clients.

The note outlines several possible scenarios for how policymakers might act if new economic figures are not available before the meeting.

A slim majority of Fed officials, likely including Chair Jerome Powell, already viewed downside labor-market risks as significant enough to justify “at least 75bp of cuts this year,” BofA economists Aditya Bhave and Matthew Yep said.

Without new evidence, that group would likely prefer to “follow through on the September dot plot,” while some doves could argue that a prolonged shutdown “amplifies downside risks to activity.”

However, the hawkish camp may resist additional easing. Seven FOMC participants penciled in just one cut this year, and Bank of America expects four of them — Barr, Goolsbee, Musalem and Schmid — to hold that line.

While they are not expected to dissent against a single cut this week, “a third cut might be a step too far,” economists said, especially if state jobless claims remain steady.

This could lead to “at least one hawkish dissent in December, in addition to a likely dovish dissent from Miran," they added. 

If the government reopens by late November, a delayed September jobs report could arrive before the Fed meeting, but “a single strong print will not convince Powell to go back on hold," economists emphasized. 

If data for both September and October become available, a pause could be considered “if the unemployment rate stays flat at 4.3% and activity data are solid.”

Should the shutdown end early enough for the Bureau of Labor Statistics to catch up fully, economists said the Fed’s December decision would hinge on whether the November unemployment rate falls to 4.3% or rises toward 4.5%.

“If we’re at 4.4%, the December decision will be a close call, and will hinge on the broader data flow (including inflation),” they said.

The consumer price index (CPI) rose 0.3% in September, last week’s report showed, putting the annual inflation rate at 3%, slightly below expectations for 0.4% and 3.1%. The year-over-year figure marked a modest 0.1-point increase from August.

Excluding food and energy, core CPI gained 0.2% on the month and 3% on the year, compared with forecasts of 0.3% and 3.1%. That’s a slowdown from consecutive 0.3% monthly gains recorded in July and August.

The CPI report, which solidified the case for another interest rate cut this week, was the only major economic release permitted during the government shutdown.