Well-known Investec economist Brian Kantor refers to it as the dropping of the shoe, when the reality of certain decisions start to see the light of day. The shoe is related to an upward movement in the United States federal reserve’s short term rates, with the market pricing in a 25bps hike in December, or as Kantor says ‘almost certain of doing so’.
The market reaction to this has however been far more muted than the taper tantrum responses of 2013. The South African Reserve Bank is currently meeting behind closed doors for its Monetary Policy, and will deliver its decision on rates on Thursday.
Given the muted market reaction to a potential US interest rate hike, Kantor is calling on the Reserve Bank to do as the markets have, remain composed. His argument reads below. – Stuart Lowman