The Federal Reserve lowered its discount rate by half a percentage point on Sept. 18 to 4.75-5%, the first cut since 2020. 

The cut was more aggressive than investors had been expecting a week ago, reports the Wall Street Journal. "For all the attention on the Fed, upcoming economic data could still play the biggest role in shaping markets. Stocks have historically performed well in the 12 months after the Fed has started to cut rates — unless the economy has entered a recession during that period," the WSJ reported. 

Greg Roberg, vice president of sales at AgDirect says he was pleasantly surprised by the decision. Back in August he had told Ag Equipment Intelligence’s On the Record he was expecting a 0.25 percentage point drop to be announced following the Fed's September meeting.

“This will be good news for producers as operating rates will likely come down saving them interest and equipment dealers should see lower fixed rates by finance companies to offer to their customers," Roberg says. "With the decreases in commodity prices this year, the ag industry needed some positive news and we received some today.”

A Sept. 18 Farm Equipment Insider text poll indicates over half of surveyed dealers say the news will have a positive impact on year-end 2024 farm equipment purchases. 

Don Van Houweling, owner of the Iowa-based Deere dealership group Van Wall Equipment, sees the news as positive for the industry. "It will obviously help as it will reduce every payment on every new contract but it will have more of an effect psychologically," he says. "We have been offering low interest rates on many key items already so it will just help us lower them some more. It will help us as dealers the most as it will reduce our floorplan interest costs."

Watch the full version of this episode of On The Record