News

Encouraging inflation signals

An official with Farm Credit Services of America suggests inflation is easing.

Matt Erickson says the consumer price report for March was encouraging.

“The CPI report came in at about 5 percent year-over-year. It’s still relatively high (compared) to the Fed’s target of 2 percent, but it’s come down since last June when we were at roughly 9 percent.”

He tells Brownfield interest rates should range from 4.75 to 5 percent in the near term.

“With that federal funds target range that the Fed kind of puts in, the effective rate being at about 4.8 percent. So that 19 to 25 basis point increase, that’s kind of had an impact on farmers and their cost of borrowing in terms of having that added expense.”

Erickson says the cost of borrowing is thinning margins along with higher production costs and weaker commodity prices.