Find trends and outlooks, education and more on financing rural America from Farm Credit Services of America.

More Content

Steps to Take Today in Rising Rate Environment

The Federal Reserve’s stance on increasing interest rates has become more hawkish as inflation continues to impact the U.S. economy. In mid-January, the market expected a total of only four, 25 basis-point rate increases in 2022. As of June 2, the CME Fed Watch Tool is projecting a total of 11, 25 basis-point rate increases in 2022. (Meeting Probabilities table below.)

If realized, the target range for the federal funds rate is projected between 2.75% and 3.0%. This would put the federal funds rate slightly above 2019 levels, but on par with levels seen in February and March 2008. (Federal Funds Effective Rate chart below.)

Chart Summaries

The CME FedWatch table analyzes the probability of the Federal Open Market Committee’s rate moves for upcoming meetings in 2022 and 2023 as of June 2, 2022.

meeting probabilities greenFollowing the green squares in the matrix, which contain the highest level of probability, there is a 99.3% chance as of June 2 that the Fed will increase rates by 50 basis points in June. Probabilities favor rate increases at each of the Fed’s subsequent 2022 meetings -- another 50 basis-point increase in July and September and 25 basis points in the other remaining months. Looking out to 2023, the CME FedWatch chart shows February as the month with the highest likelihood (and it is slight) for another 25 basis-point increase.

The chart shows the federal funds rate from 1954 through May 2022. The federal funds rate is the central interest rate in the U.S. financial market. It influences other interest rates, such as the prime rate, but it also indirectly influences longer-term interest rates, such as mortgages, loans, and savings, all of which are important to U.S. consumers and the U.S. economy. Currently, the rate is 0.83 percent and between the target range of 0.75% and 1.0%. The target range would increase to 2.75% to 3.0% by year’s end if the CME FedWatch Tool projections are realized.

federal funds effective rate 1954-2022 cme group and federal reserve dataThe yellow line on the right side of the chart illustrates how this projected level of increase from the CME FedWatch Tool would compare to historical levels. Additionally, the red line represents the midpoint, or the average, of the target range. If realized, the increase by the end of 2022 would be just above the 20-year average of 2.41%, but well below the time-series average (1954 through 2022) of 4.6%.


Load more comments
Your comment has been received and is being reviewed.

Comments are moderated and reviewed before they are posted on the site. View our terms of use.


Nov 17, 2023 | The Business of Agriculture

Farmland Prices Rebound to Near Highs

The real estate market for farmland rebounded in the third quarter of 2023 following several months of stabilizing prices.

Sep 22, 2023 | The Business of Agriculture

Strategic Planning

Watch as we discuss how to shift your mindset into long-term strategic planning and the benefits of doing so.

Sep 13, 2023 | The Business of Agriculture

All Eyes on Corn and Soybean Yields

Learn the market signals to watch as we head into harvest and begin thinking about 2024.

Ready to Talk?

Contact us if you have questions or need more information. Fill out the form, or connect with your local office using the Office Locator.

FCSAmerica serves farmers, ranchers, agribusinesses and rural residents in Iowa, Nebraska, South Dakota and Wyoming. For inquiries outside this geography, use the Farm Credit Association Locator  to contact your local office.