Interest rates beneficial for struggling farmers
An ag economist says its possible interest rates won’t be raised for at least two more years.
Tanner Ehmke with CoBank says interest rates are essentially at zero and recent projections by the Federal Reserve’s board of governors indicates it should stay that way for a while, “Not until we get to 2023 do we start to see a break out where we now have five of the 12 now projecting that we will have higher rates by then.”
He says the Fed is watching for inflation indicators before it would be time to raise rates.
Ehmke says at the same time the Fed is printing money, the federal government is spending it which has been weakening the U.S. dollar, which is forecast by some to decline 10 to 30 percent for 2021, “We are probably going to see upward pressure on agricultural prices because our exports, because of the weaker dollar, are put on sale.”
Ehmke expects China continuing to be a large buyer in the year ahead as they have been the only economy to show growth in 2020.
Ehmke was a featured speaker during the recent virtual Michigan Agri-Business Association’s winter conference.