News

Watch borrowing as inflation sticks around

Farmers are encouraged to watch their borrowing as the likelihood of interest rate reductions in 2024 becomes less likely.

CoBank grains and oilseeds economist Tanner Ehmke says the Federal Reserve planned multiple rate cuts for this year, but inflation isn’t letting up.

“The Federal Reserve had to walk it back here recently and say ‘ya know, we’re going to be a little bit later on cutting interest rates than we had previously thought.’ And now I think the general thinking among most economists that I follow is that we’re not going to see a cut until December maybe.”

He tells Brownfield data from ag lenders shows the level of farmer borrowing is going up.

“And that’s happening at a time when interest rates are elevated, so that’s something we want to keep an eye on. And I would stress with all farmers and ranchers out there that this is the time to have a good conversation with your banker.”

Ehmke says the U.S. economy will slow down eventually and he points to the labor market as a key indicator.