Most of the world’s major central banks are on a path of easing their monetary policies, on fears of slowing global economic growth leading to more serious recessions.
The marketplace was surprised by the late-week remarks made by influential New York Federal Reserve Bank President John Williams, who suggested the Fed should be more aggressive in its monetary policy actions to prevent a slowdown in the US economy.
That led some market watchers to believe the Fed could do a 0.5% rate cut at its late-July monetary policy meeting.
Later, the Federal Reserve tried to "walk back" Williams’ comments. St. Louis Fed President James Bullard on Friday said a 0.25% US rate cut in the near term is appropriate.
This week’s "beige book" report from the Federal Reserve also leaned easy on US monetary policy, supporting recent dovish comments from Federal Reserve Chairman Jerome Powell and other Fed officials.
This easy-money bent comes despite recent US economic data that has shown moderate expansion and low inflation.
Fed officials, including Powell, have indicated they are more concerned about global economic growth stalling, which would in turn be a drag on the US economy.
The Federal Open Market Committee meets July 30-31, at which time most market watchers believe the Fed will lower interest rates.
China’s central bank has also recently loosened the purse strings of the world’s second-largest economy’s money policy.
The European Central Bank President Mario Draghi has also said recently the ECB is ready to stimulate the Euro zone with more funds in its financial system.
More money in the world financial system would likely be friendly world agricultural markets, suggest more funds to purchase raw commodities.
Also, those agricultural products that are priced in US dollars on the world market would likely become cheaper to purchase in non-US currency, as the greenback is likely to depreciate on the world foreign exchange market as the Federal Reserve lowers interest rates.