Interest Rates Should Not Fall Too Much, Longtime Ag Executive Jim Farrell Says

Interest rates are not as high right now as some fear, and the policymakers in charge of setting those rates should be free from political interference, longtime agricultural and financial executive Jim Farrell believes.

Farrell bases his opinion on fiscal matters from his experiences through previous fiscal crises, including the Great Recession when he served on the Kansas City Federal Reserve Board.

“I went on (the board) in January of ’09, when the world was, you know, seemingly falling apart,” Farrell told American Farmland Owner from his home office in Omaha, Nebraska.

“We took interest rates to zero... and started buying all of the securities, pushing all that money into the market.” The move, known as quantitative easing, ballooned the Fed’s balance sheet from under $1 trillion to a peak of nearly $9 trillion. “That’s how much money was pushed into the market. Money that was not there prior to 2009,” Farrell explained.

Jim Farrell bio

• Sower Legacy Farmland Fund Advisory Committee -- Member

• Sower Farmland Agricultural Advisory Committee -- Member

• Farrell Growth Group – Partner, President

• Kansas City Federal Reserve Board – Director

• Farmers National Company – President and CEO

• Farmer – corn, soybeans, farrow to finish hog operation, fed cattle

RELATED: This is why former Federal Reserve Bank of Kansas City President Esther George told American Farmland Owner during this conversation last October that she saw the possibility for economic challenges ahead.  

Farrell argues that while this was a necessary emergency measure, members should have adjusted sooner. The side effects were significant—soaring asset prices, including farmland, rising production costs, and a widening wealth gap between those invested in financial markets and those simply trying to make ends meet.

“When inflation started in 2021 and 2022, and we started to raise interest rates more rapidly... we left them at zero too long,” he emphasized.

The consequence was rapid inflation, which the Fed has since sought to rein in with a more aggressive rate hike strategy.

Balancing Interest Rates

Farrell believes that the current interest rate environment—between 4% and 5%—strikes the right balance. “To me, that seems to be a reasonable place for us to be,” he said.

Reflecting on his own experience farming in the 1980s, Farrell added much-needed historical perspective. “My highest interest rate was 19.5%. I paid a little more because I was a young farmer and had no money.”

Farrell said when he and his wife moved to Minnesota in 1987, they locked in a 10% mortgage rate and considered that a good deal.

This lived experience, Farrell argues, is critical in grounding today’s monetary debates. While some, like President Donald Trump—"a real estate guy," as Farrell noted—favor lower rates for borrowing, the agriculture sector requires a more balanced approach.

“Interest rates need to be somewhere where they provide a balance,” Farrell said.

The Federal Reserve Board Is Historically Independent

Farrell also wants the Fed also to remain a separate, independent entity that is free from the political pressures of Trump or Congress. And he does not think Fed Board Chair Jerome Powell will cave to Trump’s demands to lower rates immediately or to any threat by the president to take the unprecedented – and possibly unlawful – attempt to fire him from his position.

Farrell also pointed to deeper, societal consequences of extended low interest rates. “If you didn’t have money in the 401(k) or the stock market, you didn’t participate in the ‘go-go’ years of 2010 through 2019. Your salary didn’t go up very fast, and you didn’t gain. You actually probably went backwards.”

He believes the Fed’s policies, though well-intentioned, may have unintentionally widened economic disparities. “We exasperated that problem by trying to focus too much on keeping Wall Street healthy,” he said.

For those in agriculture, Farrell’s takeaway is clear: a reasonable, steady interest rate—not a return to zero—is what rural economies need to thrive. “If we could see a 4% return on farmland... that’s reasonable,” he said, emphasizing that the ag sector depends on both price stability and access to fair credit.

In an era of economic uncertainty, Farrell’s voice is a reminder that the impact of monetary policy isn't just felt on Wall Street—but across the farm fields, too.

RELATED: Economic uncertainty is on the mind of this Kentucky farmer whose family was surprised when a letter from the USDA arrived.