NCBA Applauds Interest Rate Reduction

Washington, D.C. (November 7, 2002) – To the relief of struggling cattle producers, Federal Reserve Board Chairman Alan Greenspan announced yesterday a half point interest rate reduction, the first rate reduction this year.  The announcement comes on the heels of a pair of letters sent by Iowa cattle producer and National Cattlemen’s Beef Association (NCBA) President Wythe Willey urging the rate reduction to help “provide shorter-term interim stimulus” during a slow economic recovery. 

The most recent NCBA letter, sent November 1, makes a case for “an additional one-quarter, or even one-half, percentage point reduction in interest rates,” citing a number of economic factors.

“In light of recent record monthly trade deficits, higher than expected unemployment and disappointing GDP growth figures, we are compelled to continue to make the case that the time for interest rate reduction is now,” the letter states. 

The beef industry’s trade environment is also impacted by the relationship between interest rates and the strength of the dollar.  “Due to the unique position of our industry as importer and exporter, we are impacted by currency exchange rates on both sides of the equation,” explains NCBA Chief Economist Chuck Lambert.  “The strength of the American dollar can attract imports and reduce exports, adversely impacting the U.S. beef industry’s position in the global marketplace.” 

NCBA sent an initial request to Greenspan on September 17, urging a quarter-point interest rate reduction.  “As stated in our last letter, the U.S. economy remains mired in a slow recovery at best, and cattle producers are struggling through drought in much of the central plains and the West,” Willey says.  “Our producers operate in a very capital intensive sector of the U.S. economy, and a reduction in interest rates will make their cost of doing business easier to bear.” 

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