Donald Trump’s victory in the US presidential race throws into question the core assumption in global financial markets that the Federal Reserve will raise interest rates soon and follow with further gradual hikes over coming years.
Financial markets swooned after Trump’s win, with the dollar and stocks sinking and safe-haven sovereign bonds and gold shooting higher, reflecting fears of a prolonged global uncertainty over the Republican’s policies.
Market turmoil has stayed the Fed’s hand in the past, including a Chinese stock market slump in 2015 and the aftermath of Britain’s vote to leave the European Union last June.
Investors have tended to favor Trump’s Democratic rival Hillary Clinton as a status quo candidate who would be considered a safe pair of hands at home and on the world stage.
Trump has pledged to tear up or renegotiate international trade agreements, which could set off a wave of protectionism, threatening to stall a tentative global economic recovery.
His economic plans call for massive tax cuts that many economists estimate would sharply boost the US budget deficit.
“It raises the odds that the Fed will not move in December,” said Mark Zandi, chief economist of Moody’s Analytics, of Trump’s victory on Tuesday.
