Growing Crops is Comparable to Managing the Economy

BROOKINGS, SD – Last week the details of the most recent Federal Reserve’s Federal Open Market Committee (FOMC) meeting were released and although the meeting was held in late September, there are concerns that the Fed’s policy position may be wrong and that concern is actually echoed by a member of the FOMC, Michelle Bowman from Kansas.

Speaking at South Dakota State University, Bowman, the first person to fill the community bank seat on the board, explained how the governors consider a number of alternative scenarios for the future and try to manage the relative risks of a policy decision if the future does not turn out as expected.

“I would compare that task with the judgments other professions might be required to make throughout the year” she explained, referring to farming.

“Every farmer has an outlook for the costs of seed, fertilizer, and other inputs, and the prices the crop might yield at the end of the growing season,” she said.

“Inherent in this outlook is considerable uncertainty, and a farmer has to be able to manage the risks and possible costs of being wrong in one way or another about prices. Decisions made before the growing or breeding season can have significant effects on profits after the crop is harvested or the livestock is sold” Bowman said.

So, with each member of the FOMC, this often involves careful decisions in the near term that can play out for months and years ahead.

As part of the latest meeting, the FOMC talked about easing their purchases in the final two months of this year. They also talked about concerns with inflation continuing well into 2022.
(SOURCE: All Ag News)

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