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U.S. Federal Reserve building in Washington, D.C.

Strange bedfellows: Donald Trump and the Fed

  • Markets are expecting a short-term fiscal stimulus from the Trump administration
  • The U.S. Federal Reserve has been calling for such expansionary policies for months
  • But the Fed may turn hawkish after inflation expectations shot above 2 percent
  • That sets up a policy clash with severe repercussions for the global economy

The election of Donald Trump as the next president of the United States produced a strong reaction in global financial markets. Stocks rallied, but even more interesting was the significant strengthening of the U.S. dollar and a spike in bond yields – both driven by higher inflation expectations.

What the financial markets are telling us is not just what economic policies a Trump administration and a Republican-controlled Congress will pursue, but also how the Federal Reserve will react to these policies.

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 Lars Christensen
It is not a given that Fed rate hikes will be aggressive – at least in the short term
read more about it in the report
What's inside
  • Markets are expecting a short-term fiscal stimulus from the Trump administration
  • The U.S. Federal Reserve has been calling for such expansionary policies for months
  • But the Fed may turn hawkish after inflation expectations shot above 2 percent
  • That sets up a policy clash with severe repercussions for the global economy
Who will benefit?
  • Report is targeted to the decision makers in cross country manufacturing – suppliers, manufacturers, logistics.
  • Also considered useful for the administrative university facilities, to better understand the possibe effects of current decisions.
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