Economists not concerned negative ag impact from interest rates yet

A pair of ag economists say farmers shouldn’t be too concerned with interest rates yet.

Ag Economic Insights co-founder David Widmar tells Brownfield the Fed signaled they would potentially raise interest rates this year back in December.

“Let’s not get too hyper focused on ‘will they or won’t they’ coming out of the Fed,” Widmar said. “Because, with respect to agriculture, some of these longer-term rates are more impactful.”

He said farmers need to focus on the Fed’s 10-year treasury, which has climbed one percent in the last several months.

CoBank’s Knowledge Exchange Director Rob Fox tells Brownfield it’s unlikely the Fed would push rates too far.

“If they really wanted to be aggressive, they would take some action today,” Fox said. “But they’re very cautious and they’re signaling things months in advance.”

But he said if February’s inflation report is at or higher than January’s level of seven percent, the Fed might be more aggressive. Fox said if the Fed does raise interest rates to curb inflation, it would likely level out the spike in land values and…

“…raise the value of the dollar,” he said. “So, a higher dollar would be bad for our exports.”

Widmar said higher interest rates would put downward pressure on farm asset values in general.

David Widmar Interview
Rob Fox Interview

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