Monetary Policy May Shape Agricultural Markets in 2020

DENVER, CO – The CoBank 2020 outlook report examines 10 key factors that will shape agriculture and market sectors that serve and impact rural communities throughout the United States. One factor, according to CoBank’s Knowledge Exchange Division, is monetary policy. All eyes will be on the central banks as the world inches closer to the end of the longest period of economic growth in history. Japan and Europe are still stimulating their economies with negative interest rates and quantitative easing. After three rate cuts in 2019, the U.S. Federal Reserve is holding a more conservative stance with its target rate near 1.5 percent. China has the most room to maneuver with its short-term rate just under 3 percent. All these accommodative stances are made possible because inflation remains inexplicably low despite tightening labor markets. Federal Reserve Chair Jerome Powell’s role in 2020 is to keep the late-stage expansion going while simultaneously preparing for the recession that will arrive sooner or later.