Donald Trump's victory in the U.S. presidential race throws into question the core assumption in global financial markets that the Federal Reserve will raise interest rates soon and follow with further gradual hikes over coming years.
Financial markets swooned after Trump's win, with the dollar and stocks sinking and safe-haven sovereign bonds and gold shooting higher, reflecting fears of a prolonged global uncertainty over the Republican's policies.
Market turmoil has stayed the Fed's hand in the past, including a Chinese stock market slump in 2015 and the aftermath of Britain's vote to leave the European Union last June.
Investors have tended to favor Trump's Democratic rival Hillary Clinton as a status quo candidate who would be considered a safe pair of hands at home and on the world stage.
Trump has pledged to tear up or renegotiate international trade agreements, which could set off a wave of protectionism, threatening to stall a tentative global economic recovery. His economic plans call for massive tax cuts that many economists estimate would sharply boost the U.S. budget deficit.
"It raises the odds that the Fed will not move in December," said Mark Zandi, chief economist of Moody's Analytics, of Trump's victory on Tuesday.
Trump's win also casts doubt over Fed Chair Janet Yellen's future. He has accused the Fed of keeping interest rates low to help Democratic President Barack Obama and indicated he might replace Yellen after her term ends in January 2018, leading analysts to speculate on whether she would resign earlier.
Adding to the uncertainty for the Fed and calling its further rate path into question is the lack of detail in Trump's economic plans.
He has proposed giving states more discretion in spending federal money on health insurance for the poor, but offered little specifics. Trump has also promised cuts in individual and business tax rates, but some economists questioned the assumptions underpinning the plan and a lack of clarity as to how the breaks would be funded.
The Committee for a Responsible Budget said this has made it difficult to evaluate Trump's proposals, but estimated they could add $5.3 trillion to the federal debt over 10 years.
Trump has said his policies would unleash a wave of business investment, create 25 million jobs and roughly double annual growth in the U.S. economy.
"We have a great economic plan, we will double our growth and have the strongest economy anywhere in the world," Trump told supporters in his acceptance speech.
As voters cast ballots on Election Day, Chicago Fed President Charles Evans said the Fed would keep an eye on financial market volatility and whether fiscal policies would change after the election.
The Fed will not bow to criticism and will set policy based on its mandate to foster full employment and stable prices, Evans said. "We need independence from short term political pressure," he told reporters in New York.
The initial impact of Trump's protectionist policies may not be all bad. Economist Barry Eichengreen argued earlier this year that while tariffs threaten to fan trade wars and geopolitical tensions, the initial impact would be to boost U.S. wages and inflation, something the Federal Reserve's easy money policies have so far struggled to accomplish.
Zandi's team at Moody's Analytics estimates that fully implementing Trump's trade and immigration proposals could drive up inflation, eventually triggering aggressive Fed rate hikes and a recession, a concern shared by some investors.
"His tax cuts could open up a huge increase in the budget deficit and his trade sanctions could interrupt world trade. This could put us in a recession," said Donald Selkin, chief market strategist at National Securities in New York.
Philadelphia Fed President Patrick Harker said on Oct. 13 the Fed would have to monitor policy changes that could happen after the election. With the U.S. unemployment rate under 5 percent, a big fiscal boost could fuel higher inflation.
"If there are policies that would have distortive effects that we would have to respond to, we'll have to respond," Harker said.