Looking for a lift in global meat market prices, many believe interest rates hold the key

So much of an improvement in global demand is hinging on falling interest rates and lowering the cost of living. The US is likely to lead the charge on falling interest rates as they have done in the past with Australia, Europe, Canada, and many parts of Asia likely to follow.

The following graph highlights the periods of previous interest rate hikes and how long they have been kept on hold, which ranges from  seven to 15 months over the last 24 years. One of the important leading indicators to falling interest rates is the consumer price index (CPI), with the US Federal Reserve having a  target inflation rate of 2%, and the latest figures show CPI at 3.4%, which is up on the November figure but down on the 12-month yearly figure of 6.5%.

The good news is that US inflation is heading in the right direction, down – but is not falling quickly enough. I think that it will not be until Q3 of this year that US interest rates will fall (close to 14 months on hold), and with that, it is believed more robust consumer demand will follow when that occurs. This will hopefully see other countries follow suit, and more robust demand is likely across key markets.

~Simon Quilty