The Federal Open Market Committee (FOMC) – the policy setting arm of the Federal Reserve – voted unanimously to hold interest rates unchanged at their current 5.25% – 5.5% target in July.

Diane Swonk, chief economist and managing director with KPMG Economics, said the statement following the decision was more hawkish than many market participants hoped. There were only minor edits to the language regarding progress on inflation and the prospects for rate cuts.

Greg Roberg, vice president of sales at AgDirect, says he expects we’ll see two cuts by the end of the year, totalling about half a percent.

"I'd say Chairman Powell and the Federal Reserve in general have been very methodical and saying we're going to just wait and see what the data tells us. So now we've had a few months where job reports have been a little bit less than expected. We've seen inflation start to slow down a little bit, and so AgDirect and our parent company — Farm Credit Services of America — was not surprised that they decided to hold steady. It was some good news that he said there is a chance, we'll take a look at it in ‘24 maybe when we get together in September. So we'll take August off. They meet 8 times a year. So it'll meet in September and then November, December. Right now there's an 83% chance that they'll cut rates in September, which will drive the prime interest rate, which is operating within."

"Also, you should see fixed rates go down — 83% chance is what all the economists right now put it at. Well, it'll be a quarter, it'll be a half. I would put the money on a quarter and then that gives them a little opportunity, whether in November, most likely December to go down another quarter as a company, we're saying somewhere between 2-3 rate cuts conservatively by December of 2025. I take the over on that personally, but I think we'll get at least one, if not two cuts by the end of 2024, maybe half a percent in total. So that's good news. I think all of us would probably rather have $5.50 corn and $15 beans, but that's not on the horizon. But if we can get half a percent or so on interest rates, start getting rates back in maybe the low sixes, dare I say, in the high fives, I think that would just create some very positive vibes in the market, particularly for farmers maybe thinking about upgrading equipment."

The Ag Economy Barometer from Purdue released August 6 shows that rising interest rates, while still a concern for farmers, did see a drop in the percent of farmers who ranked it their biggest concern.

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