Much of last week’s economic headlines revolved around the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming. At the top of the list came Federal Reserve Chair Janet Yellen’s speech on Friday. The markets listened carefully in an attempt to handicap the likelihood of the Federal Open Market Committee (FOMC) raising the benchmark federal funds rate (the overnight bank lending rate) as part of their upcoming September 20-21 meeting.
Traditionally, the FOMC made those decisions based largely on their assessment of the nation’s economic growth rate. However, since the financial crisis and the huge plunge in employment, the FOMC has largely operated under the “dual mandate.” That is, FOMC monetary policy is now directed by both inflation and employment in the United States.
With that in mind, one of the key indicators for consideration stems from the Bureau of Labor Statistics. The agency’s Jobs Report (formally known as the Employment Situation Summary) is highly anticipated every month by traders as proxy for economic growth. The August report marked 255,000 new jobs being created in July – well ahead of pre-report expectations. The next report is scheduled for Sept. 2 and will be a key for any change in rate policy going forward.
All of this discussion is important with respect to the interest rates, the general economy and the connectivity to beef demand, agricultural loan rates, exchange rates and export markets, and a whole variety of other considerations. What’s your general assessment of the economy? What do you think the FOMC will do in September? What impact would a quarter-point rate increase have on agriculture and the beef industry? Leave your thoughts in the comments section below.
Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.
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