Morning Briefing: Fed and RBA's paths to rate hike clouded by Trump win

The Federal Reserve’s path to raising interest rates looked smooth 24 hours ago... Trump win may drive Australian real estate sales higher and pressure RBA to cut rates further...

Fed’s path to rate hike clouded by volatility-spurring Trump win
(Bloomberg) -- The Federal Reserve’s path to raising interest rates looked smooth 24 hours ago. Republican Donald Trump’s unexpected election victory has made it a lot rockier.

Trump stunned investors and pundits by capturing the White House on Tuesday, having pledged to “make America great again” by overturning international trade deals and building a wall on the U.S.-Mexico border. Global financial markets gyrated on the news.

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.

“He is the uncertainty candidate -- we don’t quite know where his platform is going to fall, what he’s going to focus on,” said Gennadiy Goldberg, interest-rate strategist at TD Securities LLC in New York. “It could lead them to pause in December, which would be unexpected.”

Trump win may drive Aussie real estate sales higher
A number of economists have predicted that local interest rates may drop and foreign investors may look to Australia in light of Donald Trump's presidential victory.

In an article from The Australian, REA chief economist Nerida Conisbee said if the US increases rates from record lows, this could prompt the Reserve Bank of Australia to cut the 1.5% official cash rate.

“Right now it is likely the US Federal Reserve will increase ­interest rates in December. Ideally they won’t be influenced by the election result,” Conisbee said.

“The impact on our rates at this stage is uncertain. Under Trump, uncertainty in the US may lead to a strengthening of the Australian dollar that an increase in US rates is unable to offset. It may put more pressure on the RBA to cut rates.”