Source: FARM DOC DAILY, UNIV. OF ILLINOIS, 7/20/17

In June, the Federal Reserve's Open Market Committee (FOMC) raised the interest rate on overnight deposits (the discount rate) 25 basis points to 1.75%, mirroring similar rate increases in March 2017 and December 2016. The long-run expectations of FOMC members suggest that future rate hikes are expected. As interest rates move higher, farmers may see rising interest expenses on their operations. This article examines the relationship between the discount rate and the interest on farm operating loans.

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