The Federal Reserve shows no signs of stopping its barrage of rate hikes anytime soon — and the US public is already seeing the effects.
A brief catch-up: to deal with the acceleration of prices brought on by the effects of the pandemic and the war in Ukraine, the Fed decided to start gradually raising interest rates after a long period of exceptionally low rates. This, they hope, will tamp down consumer demand, by imposing “some pain” on average American workers — even as the Fed chairman admits all this will do nothing about the rise in food and fuel prices. To that end, the Fed has raised the short-term interest rate four times straight now for a total of three percentage points.
Little by little, we’re starting to see the effects of this. For example, take the agricultural sector, which relies heavily on credit between harvests to pay for virtually everything that goes into farming. Interest expenses are set to rise nearly 40 percent to $26.5 billion this year, substantially more than in other sectors like retail and motor vehicles, with the Federal Reserve Bank of Chicago recently finding that feeder cattle loans and farm real estate loans in the Fed’s Seventh District — comprising five Midwestern states from Michigan to Iowa — had reached their highest figures in more than a decade. As a result, farmers are now wrestling with how to afford their suddenly more expensive debt, with some considering planting fewer crops next year…
