NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — Creighton University economist Ernie Goss believes that even though the Federal Reserve didn't raise rates this month, that doesn't mean they are done raising rates entirely.
"I think they are going to raise interest rates at the end of July," Goss said. "That's a real concern. Inflation is coming down dramatically. In other words, the Producer Price Index, that's in terms of agricultural prices and so on, coming down very quickly right now. Year over year numbers are negative right now, in terms of producer prices. Of course, in terms of farm land prices, that's continuing to grow despite these lower inflation readings."
The rate fluctuations really concern the bankers that are part of the Creighton University Rural Mainstreet Index.
"They are concerned about what the Federal Reserve is doing right now to them, in terms of what they have to pay for deposits," Goss said. "In other words, on the short end, bankers are having to pay more and more, higher and higher interest rates for their deposits. At the same time, they are not getting those same higher interest rates on their loans that they make to businesses and to farmers."
Goss also is concerned about the overall world economy and how that can impact agriculture, in particular.
"China's economy is slowing down, down, down," Goss said. "Of course, there's the issue with Taiwan. Mexico is the number one export destination for most of the states, except the northern states, Minnesota and North Dakota, it's Canada, but nonetheless, that's a concern of mine going forward."
Though agricultural commodity prices have been strong, weather does have a negative effect on yields, particularly in wheat country this year.
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