Powell: Premature to Expect Interest Rate Cuts in Near Future

Haley exits contest, withholds support for Trump | USDA to update voluntary labeling rules for U.S. meat products; concerns raised by Mexico and Canada

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March 06, 2024 10:30 AM

Haley exits contest, withholds support for Trump | USDA to update voluntary labeling rules for U.S. meat products; concerns raised by Mexico and Canada

A mid-morning update as I am en route to Peoria, Illinois, for a
speaking event at the Strom Family Farms.

— Federal Reserve Chairman Jerome Powell testified before a House panel, asserting that it is premature to expect interest rate cuts in the near future. Powell emphasized the need for greater confidence in controlling inflation before considering any rate reductions, cautioning that premature or excessive rate cuts could lead to more severe rate hikes later on. While Powell acknowledged that interest rates may have peaked at their current range of 5.25% to 5.5%, and indicated a likelihood of rate cuts at some point in 2024, significant reductions are unlikely given persistently high inflation levels.

The Federal Open Market Committee, scheduled to meet on March 19-20, will determine the federal funds rate, which influences various loan rates. Despite considerable decreases in inflation in recent months, it remains above the desired 2% level, impacting market expectations regarding rate cuts. Futures trades suggest a scenario of 100 basis points of rate cuts by the end of 2024, down from 175 basis points implied at the beginning of the year.

— Haley suspends campaign: It’s up to Trump to ‘earn’ my supporters’ votes. Former UN Ambassador Nikki Haley formally suspended her campaign on Wednesday and called on former President Trump to earn her supporters’ votes heading into the general election. “It is now up to Donald Trump to earn the votes of those in our party and beyond it who did not support him, and I hope he does that,” Haley said in remarks to supporters in Charleston. “At its best, politics is about bringing people into your cause, not turning them away. And our conservative cause badly needs more people. This is now his time for choosing. “ Haley’s comments come after Trump swept the majority of Super Tuesday contests, bringing him closer to the nomination.

— McConnell says he is endorsing trump for president: WaPo. “It is abundantly clear that former President Trump has earned the requisite support of Republican voters to be our nominee for President of the United States,” Senate Republican Leader Mitch McConnell says in a statement to the Washington Post.

— Elon Musk says he won’t donate to either presidential candidate. Elon Musk signaled he will not be donating money to likely Republican nominee Donald Trump or President Joe Biden, downplaying expectations after a meeting with the GOP candidate earlier this week. “Just to be super clear, I am not donating money to either candidate for US President,” he said in a post on X Wednesday. Musk stopped short of specifying Trump or Biden by name.

— USDA set to update voluntary labeling rules for U.S. meat products; concerns raised by Mexico and Canada. USDA is preparing to announce a regulatory update regarding the voluntary labeling of meat and poultry products originating from the USA. This update follows the completion of the Office of Management and Budget’s (OMB) review on March 5 of the USDA’s final rule on this matter.

The final rule represents a slight departure from the proposed rule, which primarily addressed the voluntary labeling initiative known as the Product of USA labeling effort. During its review, OMB conducted three meetings with stakeholders, including The North American Meat Institute, representatives from the livestock industry in Mexico and Canada, and the National Turkey Federation.

Significant concerns were raised during these meetings, particularly by the Mexican and Canadian representatives, who argued that the USDA’s proposed rule did not adhere to the Administrative Procedure Act and could conflict with U.S. Customs practices, the US-Mexico-Canada Agreement (USCMA), and international standards. They also criticized the rule for being based on flawed or questionable data.

A key issue highlighted by the Canadian and Mexican representatives was the potential for the rule to lead to discrimination and segregation within the meat industry, potentially disrupting the integrated North American market. They expressed concerns that the requirement for animals to be born, raised, slaughtered, and processed in the US could shift parts of the supply chain away from their countries.

Furthermore, they warned that such measures could trigger retaliatory actions, leveraging their successful challenge of US mandatory Country of Origin Labeling (COOL) rules.

Notably, no groups supporting the USDA plan met with OMB during the review process.

The final details of the rule will be crucial, and there is significant apprehension within the U.S. industry about its implications. The ultimate impact could be substantial, especially if Mexico and Canada perceive the rule as contradicting U.S. commitments, potentially leading to retaliatory measures.

— Poultry and meat industry groups express reservations or opposition to USDA’s latest livestock and poultry market final rule, citing concerns over increased costs and potential litigation. While the rule aims to address discrimination and promote competition, critics argue it could lead to excessive regulation and higher consumer prices.

The National Chicken Council (NCC) criticizes the rule as part of the Biden administration’s regulatory agenda, questioning the need for additional regulations given stable consolidation rates in the poultry sector.

The North American Meat Institute (NAMI) also opposes the rule, viewing it as an overreach of federal authority and warning of increased meat prices for consumers.

However, the National Cattlemen’s Beef Association (NCBA) takes a softer stance, acknowledging some improvements in addressing concerns but urging USDA to focus on the rule’s intended objectives.

American Farm Bureau Federation President Zippy Duvall: “AFBF appreciates Secretary Vilsack and USDA’s finalization of another rule that helps bring transparency and fairness for farmers and ranchers who raise livestock and poultry under contracts with companies. This rule provides additional clarity regarding retaliation and deceptive practices in business dealings. It is a welcome complement to USDA’s Transparency Disclosures for Contract Poultry Growers rule implemented in February. Farm Bureau will continue to work with USDA to ensure a level playing field for the farmers and ranchers who keep America’s kitchens stocked.”

The final rule was published today in the Federal Register and will take effect after 60 days.

— A convoy carrying Ukrainian President Volodymyr Zelenskyy narrowly avoided being hit by a Russian missile in the city of Odesa. The missile struck just 164 yards from his motorcade, which was accompanying a Greek delegation led by Prime Minister Kyriakos Mitsotakis. Zelenskyy expressed concern over the indiscriminate nature of the attack, indicating casualties but awaiting further details. He emphasized the need for self-defense, particularly through air defense systems. The incident occurred while Zelenskyy and Mitsotakis were visiting the port of Odesa. Despite sirens and explosions nearby, the Greek delegation’s safety was assured. The missile strike, suspected to be from either an Iskander or Onyx missile, happened shortly before a scheduled meeting between Mitsotakis and Zelenskyy. Despite the attack, the meeting proceeded as planned, with officials indicating a joint statement would be issued.

— Purdue poll: Over half of large U.S. farmers offered $1,000+/acre for solar leases; interest high despite controversy. A Purdue University poll revealed that over half of large U.S. farmers have been offered at least $1,000 an acre to lease their farmland for solar panels instead of crops, marking a significant increase from previous years. Interest in leasing land for solar energy development remains strong, with one in 10 farmers engaging in discussions about solar leases in the past six months. Payment rates offered varied widely, but more than half of respondents were offered $1,000 an acre or more. The conversion of farmland to solar power has stirred controversy in rural America, but utility companies like Dominion Energy are actively seeking land for solar projects, offering long-term leases and specific land requirements. Compared to carbon contracts, solar leases are more lucrative for farmers, with solar capacity installations reaching a record high of 33 gigawatts last year. The Purdue survey targets large-scale farmers with production worth at least $500,000 annually and has a margin of error of plus or minus 5%.

— Inflation poses a significant challenge for politicians, particularly for President Biden. Former President Trump has been criticizing Biden’s handling of high prices, which has boosted Republican support in polls. Despite this, various economic indicators suggest that the economy is robust. The White House is attributing the blame for inflation to corporations engaging in price gouging. This theme is expected to feature prominently in tomorrow’s State of the Union address.

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