(FinAlternatives) Britain’s shock decision to leave the European Union will have far-reaching consequences for the global economy, but in the short term a major consequence is an almost certain delay in the pace of monetary policy normalization in the United States.
Even before the referendum’s results were official, traders had already pushed the implied probability of the Fed’s next major hike into next year. Given the fragile state of the economy, which was cited as a reason to temper the pace of rate increases in the Fed’s most recent minutes, the Brexit vote will only give the Fed greater reason to pause – especially since the true economic impacts of Britain’s decision won’t be truly calculable for years.
