The Fed: Uncertainty Created by Trump’s Election

The Fed’s pun has signaled more rapid rate hikes in 2017. The increase in the Fed Fund Rate, which now ranges from 0.50 to 0.75 percent, has been anticipated by the market.

However, the prospect of tighter monetary constraints have contributed to a sell-off on shares and short-term U.S. bonds.

Citing Reuters, Thursday (15/12/2016), Fed Governor Janet Yellen has stated that the U.S. presidential election victory of Donald Trump has cast a cloud of uncertainty on the central bank.

Furthermore, the election of Trump has also caused policymakers to shift their views on what will happen.

"All participants (in the Federal Open Market Committee meeting) recognize that there is uncertainty in how economic policies will change, and what that will mean for the economy," said Yellen.

Even though Trump will not be sworn in until January 2017, Yellen admitted that several FOMC participants have changed their fiscal assumptions.

At least 17 FOMC members have increased the outlook for interest rate hikes since last September.

In a media briefing, Yellen was also barraged with questions about President-elect Trump. However, Yellen was reluctant to comment on Trump’s Twitter practices related to corporations or give advice on how fiscal, tax, or trade policies should be regulated.

"I will not give advice to the president-elect on how to conduct himself," said Yellen.

During the presidential campaign, Trump often criticized Yellen and has considered replacing Yellen when her term ends in 2018.

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