Economists on Interest Rates: “I wish we had a crystal ball to know what’s next”

Borrowing costs are at the top of farmers’ minds as they get ready to plant for the year.

Fed Chair Jerome Powell left interest rates unchanged last week. Economists say it is anyone’s guess where the year will go, but warn you need to be prepared.

“I wish we had a crystal ball to know what’s next, and I would say that what you don’t want to do is just cross your fingers and hope interest rates keep falling. Not doing anything is just as risky as taking an all-in position either way. So what we’ve seen a lot of people do is somewhere meet in the middle where they try to get to a risk rate neutral stance where half the debts floating, half the debts fixed. If rates go up, great, you have protection in place. If rates keep falling, great, half the debt keeps on floating down lower, too,” said Josh Cannington with StoneX.

Carrington says it is important to make use of market tools, like swap options, which could allow farmers to choose which risks they want to take.

Related Stories
David Klein with the American Society of Farm Managers and Rural Appraisers (ASFMRA) shares an end-of-harvest update and a peek at the farmland market in Central Illinois.
The Farm Bureau urges trade enforcement, biofuel growth, fair input pricing, and pro-farmer policy reforms to restore long-term certainty.
Livestock profits are propping up overall sentiment, but crop producers remain cautious amid tight margins and uncertain policy signals.
Farmers for Free Trade Executive Director Brian Kuehl shares more about the tour to gather farmers’ insights on the economic challenges they face in the ag economy.
Recent U.S.–China trade developments provided a small lift for soy markets, though most traders are waiting for concrete purchase data before making major moves.
Wheat futures briefly hit a three-month high before retreating as the markets wait for word on whether the deal will actually happen.