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Rural Banks Feeling Farm Economy Pressure

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Three years of lower farm income has small bankers on notice. Kansas City Federal Reserve Bank executive director Esther George said this week, “I wouldn’t say we’re in a crisis, but we are seeing signs of underperforming loans.” She suggested the Fed should consider raising interest rates now as the overall national economy seems ready for increases and low rates may be intensifying pressure felt by rural banks. While she says the banking industry is in a better position than a few years ago, George comments that “the banking industry does not benefit in a low-interest rate environment.” With little room to move interest rates lower, she says moving rates up now will avoid bringing risk to the economy later.

George adds that the sagging agriculture economy is one of the most carefully monitored sectors in the economy right now by the Federal Reserve.

Source: NAFB News Service