ECONOMY
GAVIN KEETON: Argentina shows risk posed by higher US interest rates
Last month the yield on US 10-year treasury bonds rose to above 3% for the first time since 2014. This is an important reminder that the era of very low interest rates and quantitative easing that followed the 2008 global financial crisis is nearing its end. The US Federal Reserve has raised interest rates six times since 2015. Further increases are expected in 2018 and 2019 because interest rates are much lower than historical norms. The 10-year bond yield was typically 4%-5% prior to the financial crisis. It is likely to take some time before pre-crisis levels are reached, as central banks are still nervous about possible negative impacts on economic recovery if interest rates rise too rapidly. Why does a rise in US interest rates matter for South Africans? The good news is the Fed is raising rates because it is increasingly confident growth in the US economy is now sustainable. The IMF recently forecast that the US would grow 2.9% in 2018 and 2.7% in 2019. This is much faster tha...
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