Trump win ‘not a good day for world economy’

Frankfurt / AFP

Donald Trump’s shock election win in the United States “is not a good day for the world economy” and could force the European Central Bank “to intervene”, governing council member Ewald Nowotny said on Wednesday.
Nowotny told reporters in Vienna the ECB was “prepared to intervene” as he warned of “massive insecurities” after the vote outcome sent shockwaves through global markets.
“Close observation is certainly necessary right now,” said Nowotny, who is on the ECB’s governing council that makes monetary policy decisions as he is head of Austria’s central bank.
Europe’s recovery could also be affected if Trump’s presidency took a “menacing turn”, he noted.
Nowotny added he expected “a period of uncertainty in the medium term”, as had happened after Britain’s decision to leave the EU in June.
Trump’s surprise defeat of his Democratic rival Hillary Clinton sent stocks tumbling across Asia, although markets pared losses in European trading and London’s FTSE 100 index briefly bouncing into positive territory. Nowotny said it was too soon to predict whether the US Federal Reserve was still likely to raise interest rates in December.
“That will depend on how the American economy reacts in general,” he said. The ECB’s chief economist Peter Praet also called for calm on Wednesday. “I think we have to be calm — calmer than the markets certainly,” Praet said on the sidelines of a banking conference in Brussels.
“It’s too early to react to such events and we are closely monitoring the situation,” he added.
“I think all communication on monetary policy has not changed and will not change as a result.”