Two devastating hurricanes have hit the southeastern United States in recent weeks. This has made it more difficult for the Federal Reserve to assess the economic situation. However, analysts think the Fed is likely to continue to cut interest rates by 25 basis points at its meeting early next month.

James Knightley, chief international economist at ING, said that such weather conditions make policy making challenging and it is right to proceed with caution, but a 25 basis point rate cut is still possible. Some economists are judging based on recent speeches by Federal Reserve Chairman Powell, who hinted that there may be another 25 basis point rate cut in the future.

In the past, the Federal Reserve often ignored temporary supply shocks caused by natural disasters. When Hurricane Katrina hit in 2005, the Federal Reserve paid lip service to it, but continued to raise interest rates by 25 basis points at each meeting. But now it is different. Diane Swonk, chief economist for the United States at KPMG, pointed out that natural disasters have been so numerous and severe recently that it is becoming increasingly difficult for the Federal Reserve to ignore them.

After a hurricane, more people will apply for unemployment benefits. Hurricane Helene made landfall in Florida on September 26, and the latest report shows that the number of applications for unemployment benefits has reached the highest level in more than a year. Hurricane Milton, which hit Florida on Wednesday night, will also temporarily increase the number of applications. Pantheon economists said that the number of applications may surge to about 270,000 before declining. The impact of these two hurricanes may not disappear from the data until mid-November.

On November 1, the United States will release the October non-farm payrolls report, a week before the Federal Reserve’s interest rate meeting. Some economists say that recent hurricane activity may reduce the number of new jobs in October by 50,000. Fed officials have to be careful about the next employment report because of the hurricane and the Boeing strike.

However, many economists still think that the Fed will cut interest rates by 25 basis points in November, even though the CPI data released this week was higher than expected. But economists said that the details of the CPI report showed that inflation was not serious enough for the Fed to not cut interest rates. They are more worried about the labor market than inflation. Fed officials also hinted that they will continue to lower the benchmark interest rate. Chicago Fed President Goolsbee said that the job market has cooled to a sustainable level and the Fed hopes to maintain this level.