🚨 Federal Reserve Responds to Shutdown Fears 🚨

On September 30, Fed official Collins reassured markets: even if the U.S. government shuts down, the Federal Reserve’s core operations will continue.

👉 The Fed can still print money, manage banks, and adjust interest rates as needed. In short: the “heart of the financial system” keeps beating.

🔎 Key Takeaways

1️⃣ Fed Independence

The Federal Reserve operates with strong independence — its funding comes from activities like buying/selling government bonds and serving financial institutions, not directly from government budgets. This means a shutdown won’t halt Fed operations.

2️⃣ Hidden Risks

While the Fed remains active, the shutdown delays key economic data and regulatory functions. This forces policymakers to make rate decisions with incomplete information — essentially “driving on the highway blindfolded.” The risks for markets are significant.

⚖️ Bottom Line

The Fed’s message is both confidence and caution: the financial system won’t break, but the uncertainty from Washington’s political deadlock will ultimately be felt across the markets.

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