WASHINGTON—Donald Trump’s victory in the presidential election could disrupt plans for an anticipated interest rate increase next month by the Federal Open Market Committee, according to NAFCU’s Chief Economist and Director of Research, Curt Long.
“A December rate hike looked like a sure thing prior to the election, but is now somewhat less certain,” Long said. “While markets reacted positively to his victory speech, the possibility for further volatility between now and the Fed’s next meeting has increased. And this Fed has shown that it is sensitive to market turmoil.”
The FOMC next meets Dec. 13-14. Following its meeting earlier this month, the FOMC left the federal funds target rate unchanged at a range of 0.25 to 0.5%, which has been held since December 2015.
Following Trump’s victory Tuesday night, U.S. stock futures and the dollar spiraled down, but they had steadied by Wednesday morning. According to futures company CME Group, investors placed the odds of a December hike at 81% prior to the election, and following an election-night decline and subsequent recovery, currently stands at 76%, NAFCU reported.