General outlook.

Pro Farmer, January, 2007

INTEREST RATES: While the Fed has left the door open for a tighter monetary policy, economists and financial traders widely expect short-term interest rates to remain at 5.25% following the Jan. 30-31 Federal Open Market Committee (FOMC) meeting.

Traders are so certain no change will be made to monetary policy this month, they have only about a 5% chance of a rate hike built into Treasury futures. And current odds of a rate hike are about the same for March.

Fed governors continue to signal inflation may pose a threat to the U.S. economy. It will likely take months before economic data can convince them inflationary concerns have eased enough to shift monetary policy.

For now, interest rates are high enough to control inflation, but price...

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