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US interest rates: how they’ll affect SA

As long term investors, we need to ignore high-frequency economic data and short term forecasts. There will always be market or media pundits predicting or forecasting the next big crash or stock market meltdown. And in the words of the Oracle of Omaha, aka Warren Buffet – “market forecasters will fill your ear but will never fill your wallet”.

One of the major business cycle drivers in the world is the US GDP growth and the US interest rate cycle. It is well known and publicised that the US is growing (albeit below its long term average) and the prospect of higher interest rates in the world’s largest economy could come this year has already sent the dollar surging against most currencies, including the South African Rand.

The question is, what will happen to South African interest rates when the US Fed starts to raise interest rates?  Read on ….