UNITED STATES - On Wednesday, the Federal Reserve announced that it will be holding the federal funds rate near 0% for “a considerable time” into the future. This key short-term interest rate has broad influence on the interest rates charged on loans for everything from new farm mortgages to lines of credit for retailers across the United States.
Investors of all stripes had worried that were the Fed to raise the federal funds rate, it would combine with the effects of a separate change in the Fed's bond-buying policy to increase the cost of business and expansion projects by a significant margin. The Federal Reserve however feared that the U.S. economy was still too weak to risk such a policy decision at this time.
"The labor market has yet to fully recover,” Federal Reserve Chairwoman Janet Yellen shared with reporters from USA Today.
“There are still too many people who want jobs but cannot find them, too many who are working part-time but would prefer full-time work, and too many who are not searching for a job but would be if the labor market were stronger,” she elaborated to PBS.
USA Today's Paul Davidson, citing Federal Reserve policy makers and a recent investor press release, projected that rates will stay at their current level till mid 2015.
The market reacted strongly to this news, as heightened market confidence among businesses, investors and consumers alike drove the Dow Jones Industrial Average to consecutive record highs during Wednesday and Thursday trading. At the end of Thursday's trading session the Dow sat at 17,265.99, 109.14 points higher than when it opened on Wednesday morning.
What will this mean for the produce and retail industries going forward?
The key takeaway is that growers and retailers looking for lines of credit in order to expand, update, or maintain their facilities will still have access to the low interest options which have played an important part in the growth the industry has enjoyed over the past several years.
According to USA Today, rates are expected to begin to increase this coming June and close in on around 1.3% by the end of the year. They are expected to rise again to about 2.8% by the end of 2016.
Stay tuned to AndNowUKnow for future market updates and their implications for the fresh produce and retail industries.
