Check our advice monitor at ProFarmer.com for updates to our marketing plan.
The Federal Reserve, as expected, left interest rates on hold Wednesday after cutting in the three previous meetings, with Chairman Jerome Powell giving no indication the central bank is in a rush to resume easing despite intense pressure from President Donald Trump.
“I would bet pretty heavily that there’s not another rate cut under Chairman Powell,” said closely followed bond-market guru Jeffrey Gundlach, founder, CEO and chief investment officer of Doubleline Capital, in a CNBC interview after Powell’s post-meeting news conference.
Powell’s term as chair of the Fed ends on May 15. He’s set to preside over two more policy meetings before his term is up.
The Fed’s aggressive 16-month hiking cycle that ran from March 2022 to July 2023 as policymakers scrambled to bring down a surge in inflation, raised the fed funds rate from near zero to 5.25%-5.5%. It ended an era of cheap money for farmers and the broader economy. Farmers saw interest expense rise 19.1% in 2023 and 33.2% in 2022, according to USDA’s Economic Research Service. The subsequent easing cycle is seen helping to at least blunt some of the pressure felt by producers squeezed by low prices and high input costs.
At the same time, aggressive rate cuts, particularly with inflation still significantly above target, run the risk of fueling a resurgence in price pressures that would then potentially require another outsize round of rate hikes or risk runaway inflation.
The policy setting Federal Open Market Committee voted 10-2 Wednesday in favor of leaving the fed funds rate at a target range of 3.5%-3.75%. The two dissenters, Fed governors Christopher Waller and Stephen Miran, voted for another quarter-point reduction. The committee made modest tweaks to its policy statement, while Powell, in his news conference, said “tension” between the central bank’s twin mandates of price stability and full employment had eased. Powell said the jobs market looks more stable, though signs of cooling also remain, while inflation appears set to fall, though core PCE, the Fed’s favored inflation gauge, is still seen ending the year at 3%, one percentage point above the central bank’s target.
All in all, it painted a picture of a Fed that’s in no hurry to make its next move. But what about once Powell is no longer at the helm? Waller, who dissented in favor of a cut, is among the four candidates to succeed Powell. The others are BlackRock’s Rick Rieder, White House economic adviser Kevin Hassett, and Kevin Warsh, a former Fed governor.
Trump has made it clear he wants the next Fed chair to cut rates aggressively. Asked by the Wall Street Journal last month where he thought rates should be, Trump replied, “1% and maybe lower than that.” Rate cuts, he said, would help the U.S. Treasury reduce the costs of financing $30 trillion in government debt.
Despite Trump’s loud calls for lower rates, traders and investors don’t appear convinced a post-Powell Fed is likely to push rates anywhere near 1%. Fed-funds futures traders have priced in an 84% probability of just one to three more quarter-point rate cuts by year-end, while the policy-sensitive two-year Treasury yield has remained relatively stable.
And some prognosticators are betting that the first rate move by Powell’s successor won’t be a cut.
“While the outlook remains uncertain, particularly given the appointment of a new Fed Chair in coming months, our baseline remains that the rate cutting cycle is complete, as labor improvement lies ahead,” said David Doyle, head of economics at Macquarie Group, in a note. “We see the next move as a hike, potentially occurring in 4Q26.”
“The U.S. always has a strong dollar policy,” Treasury Secretary Scott Bessent told CNBC Wednesday, dismissing notions the greenback’s status as a global reserve currency was under threat. “If we have sound policies, the money will flow in,” he added. “We are bringing down our trade deficits, so ... automatically that should lead to more dollar strength over time,” he said. The ICE U.S. Dollar Index turned higher and snapped a four-day losing streak that had taken the popular gauge of the currency’s value to a four-year low. Losses had accelerated Tuesday after Trump told reporters the dollar’s fall was “great,” which investors took as a signal that the administration favored further depreciation. Bessent also poured cold water on the notion of the U.S. joining Japan in an intervention effort to boost yen by buying the Japanese currency and buying U.S. dollars.
Ethanol production dipped last week amid a winter storm and cold temperatures but remained solid. Output averaged 1.114 million barrels a day in the week ended Jan. 23, down from 1.119 million barrels the previous week, the Energy Information Administration reported. Production was up 99,000 barrels a day from the same period a year ago.
Archer-Daniels-Midland Co. agreed to pay $40 million to settle charges from the Securities and Exchange Commission that it overstated the performance of a key business segment, Reuters reported. ADM reached the settlement without admitting or denying wrongdoing and said the Justice Department had closed its own investigation without bringing criminal charges, according to the report.
A new sustainable aviation fuel project might soon get under way in Singapore. Keppel and Aster have agreed to jointly assess a production project on the city-state’s Jurong Island industrial area, the companies said, according to Reuters. The proposed facility is expected to produce up to 100,000 metric tons of SAF per year, the companies said in a statement without giving a timeline.
Take part in our Annual Land Survey and we’ll share the results with you in our Annual Land Report. Take survey.