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Experts say Donald Trump’s election victory could change U.S. interest rate policy as promised policies risk higher inflation, which could eventually have implications for Canadian rates and the loonie .

Markets rallied on Wednesday and Thursday following his victory, as investors prepared for what his proposals might bring.

Among these promises are high customs duties on imported products, particularly from China, as well as lower tax rates and lighter regulations.

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Economist Sheila Block says Trump’s proposed high tariffs would likely put upward pressure on inflation in the United States.

Higher inflation would mean the U.S. Federal Reserve could be slower to cut interest rates, and markets are already shifting their bets that the central bank is likely to cut rates.

Block says a weaker Canadian dollar could in turn have an inflationary effect north of the border, which could make our central bank more hesitant to cut rates too quickly.

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