Sticky Inflation Puts Fed on the Horns of a Dilemma

Brian Earnest , Tanner Ehmke , Jacqui Fatka , Rob Fox , Corey Geiger , Jeff Johnston , Christina Pope , Abbi Prins , Billy Roberts and Teri Viswanath

April 11, 2024

Sticky Inflation Puts Fed on the Horns of a Dilemma

As we pointed out in our Year Ahead report in December, expectations that the Fed would cut rates six or seven times were completely irrational. The market has belatedly come around to our earlier view. But while many now completely dismiss the chance of an economic slowdown, we believe the Fed still has concerns. That’s why Chairman Jerome Powell reiterated his belief that three rate cuts were still warranted in 2024.

After the best three-year stretch for farm incomes in history, the coming year will be challenging for row crops due to ample domestic supplies and the relentlessly strong U.S. dollar. Unfortunately, U.S. farmers continue to lose global export market share, and policy makers have eschewed trade agreements that would improve international market access. Meanwhile, the farm bill remains in a state of flux amid the highly partisan divides in Congress.

While commodity markets have steadily trended lower over the past two years, natural gas prices have completely bottomed, dropping 80%, and are now flirting with all-time lows. While troubling news for producers, near-record low natural gas prices are a boon for American consumers as well as for businesses that use a lot of natural gas to produce basic materials such as steel, concrete, cardboard and fertilizer.

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In this issue

  • Spotlight
  • Macroeconomic Outlook
  • Government Affairs
  • Grains and Oilseeds
  • Farm Supply
  • Biofuels
  • Animal Protein
  • Dairy
  • Cotton, Rice and Sugar
  • Specialty Crops
  • Food and Beverage
  • Power, Energy and Water
  • Communications

Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.


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