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Interest rates to go up but now is good time for farmers to borrow

Interest rates are expected to go higher but an ag economist says it’s still a good time for farmers to borrow.

Ernie Goss with Creighton University in Nebraska says their latest Rural Mainstreet Index of rural bank CEOs in 10 states* shows more than half expect inflation to stick around.

“Interest rates flow with the upward inflationary pressures. One of the goals of the Federal Reserve is to maintain price stability. So if this is non-transitory, meaning if a portion of it is seen as continuing, the Fed IS going to raise rates.”

But, Goss expects the Federal Reserve to hold short-term rates, on things like operating loans, well into 2022.

“This is not a bad time to be borrowing. The farmer – the banks havee a lot of cash out there to lend so now is a good time to borrow.”

He says farmers should be prepared for long-term rates to go up on things like land purchases beginning no later than the fourth quarter of this year.