US Inflation Data to Hit Farm Credit and Input Costs Hard

The US inflation data is set to impact farm credit and input costs, according to AgroLatam. Financial markets moved lower on September 30 ahead of the August Personal Consumption Expenditures (PCE) inflation report and final second-quarter GDP data. The PCE index is a key measure of inflation for the Federal Reserve.

Economists surveyed by Reuters expect the August PCE index to show an annual increase of 3.7%. This matters to agriculture because stronger-than-expected inflation could reinforce expectations that monetary policy will remain restrictive or become tighter.

The path of interest rates is crucial for US farmers, as it affects operating loans, equipment financing, and capital investment. The yield on the 10-year US Treasury stood near 5.24% on September 30, close to levels not seen since 2007.