The shock victory by Donald Trump in the US presidential election has made a December Fed rate hike less likely, according to Paul Jackson, Head of Research, Source ETF.
Jackson said: “Not only would the Fed hold off hiking rates in December if markets remain agitated, it is also possible that Trump’s comments about Fed rates being held artificially low to help Obama could complicate the Fed’s thinking. Do they take Trump at his word and raise rates or do they fear his reaction to a rate hike? A December rate hike is now less likely.
“The real issue is whether a Trump presidency will be good or bad for the US and world economies. US businesses will not be encouraged but it may be that working class households feel more encouraged to spend. The problem now is the lack of detail about what President Trump will do and what the markets don’t know, they will make up. Uncertainty and volatility are likely over the coming months as we await more colour on his policy programme.”