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Ag economist expects interest rates to remain flat

An ag economist with the Federal Reserve Bank of Kansas City says he doesn’t expect interest rates to rise in the next two years.

Nathan Kauffman says the reason “is simply recognizing this was a severe crisis and that support should be warranted at least to the point where we see there is a sustainable increase in momentum for economic activity.”

He says changes in inflation from year to year are typically major factors in determining future rates.

But, Kauffman says because of COVID-19 economic shutdowns last year, it’s too difficult to compare data from April of 2020 to last month. “There is some amount of what we’re seeing in terms of inflation that’s believed to be transient but there’s also a possibility that what we’re seeing in terms of reopening economies and return to the kind of economic activity that we would’ve seen in previous years that some of it could be more persist demand strength,” Kauffman said.

He says interest rates may not have a large impact on farm profitability since rates weren’t high before the pandemic.

Kauffman made his comments Thursday during webinar hosted by the University of Nebraska-Lincoln on economic recovery in the U.S. ag industry.

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