Ag Informer – Interest Rates and Farming

The Federal Reserve announced its decision to keep interest rates unchanged on Wednesday, while also signaling two more rate hikes are likely yet this year. As the U.S. central bank continues to adjust its plan to fight inflation, farmers are dealing with interest costs that have doubled year-over-year.

Wednesday’s interest rate decision broke a streak of 10 straight meetings where the Fed announced an interest rate hike. During the two-day meeting, officials said another half-a-percentage-point hike is likely before the end of the year. The decision to pause the rate hikes this month was due to a slower decline in inflation, but also a stronger-than-expected economy.

Farmers are dealing with 8.25% prime rates today, which are high for recent history. But a historical look back shows the highest prime rate was 21.5%. Rates hit the record on December 19, 1980.