BlackRock says market turmoil from Trump upset win may cause Fed to push back US rate increase

BlackRock, the world’s largest money manager, said that market turmoil resulting from Donald Trump’s presidential victory may cause the Federal Reserve to hold off on an interest rate increase in December.

“Any Fed delay in raising rates is a near-term negative,” according to a bulletin released by the New York-based company Wednesday.

Prior to the result, the Fed seemed poised to lift rates next month for the first time since December 2015. In the election’s aftermath, market volatility could stay their hand if it persists and financial conditions tighten. Uncertainty about how Trump will approach domestic and international policy could further obscure the economic outlook, and how that plays out has potential to delay or accelerate Fed policy tightening.

Other investors echoed BlackRock’s view regarding the Fed’s plans.

“The uncertainty and volatility following the US election will, for now, reduce the probability of a Federal Reserve rate hike in December,” wrote David Kelly, chief global strategist for JPMorgan Funds, in a note titled “A Populist Victory.”

Jack Ablin, chief investment officer at BMO Private Bank, said in a note: “A Trump victory and concomitant market volatility would likely force the Federal Reserve to re-evaluate their monetary policy strategy.”