With the Federal Reserve hinting at leaving interest rates unchanged in 2019, the farm economy has one less chance for deterioration. Low-interest rates have been cited as the reason the current farm economy has not reached the crisis seen in the 1980s.
Politico reports that while farmers are having losses, those losses don’t compare to the 1980s when interest rates were between 10 and 20 percent, compared to the five or six percent rates seen today. Despite declining farm income and low commodity prices, the low-interest rates are keeping land values strong.
The Federal Reserve bank this week signaled interest rates will not likely be raised in 2019, veering away from the previous plan that included two interest rate hikes this year. Chairman Jerome Powell noted that there is “major uncertainty” regarding the U.S. economic picture, suggesting that the outlook is overall positive, but growth “is slowing somewhat more than expected.”