For as much as the Federal Reserve professes its independence, it is not immune to politics. Financial markets are well aware of this sensitivity and are beginning to rethink where the central bank is heading, following Donald Trump's shocking election victory.
Prior to Tuesday's election, Wall Street widely expected the Fed to enact its first rate hike in a year at the December Federal Open Market Committee meeting.
However, as it became clear that Trump was going to score an improbable victory over Democrat Hillary Clinton, the market recalibrated.
At one point overnight, traders had put their anticipation for the December fed funds rate — the Fed's target for overnight rates — as low as 0.45 percent, or just 4 basis points above its current rate. That would translate to a minimal probability for a hike next month.
"With the violent reaction being seen in financial markets, there's a good chance that a rate hike from the Federal Reserve is less likely in December," said Mark Hamrick, Bankrate.com's senior economic analyst. "The Fed has wanted to move further along the path toward normalization, or higher rates. As the election has demonstrated, we live in times that are anything but predictable."