It looks likely that the Federal Reserve will raise the US interest rate by 25 basis points to a range between 0.25% and 0.5%, the first hike in US interest rates in nine years. The much-anticipated rise in rates has two targets – inflation and employment.

With unemployment levels at lows of 5%, the Fed anticipates wage inflation in the coming years which will in turn lead to an inflation of the cost of living. The Fed aims to move ahead of the market by raising interest rates now and put the reins on inflation before it takes off.

As well as this, the Fed believes that if interest rates remain at current levels, sectoral markets will begin to overheat, fuelled by cheap credit, just like before 2007.

Divergence

With the Fed turning around towards a tightened fiscal policy, it has moved on a divergent path from that of the European Central Bank, which is still operating a loosened fiscal policy in an attempt to stimulate.

Ultimately, this is a good sign for the US economy which has been growing steadily for the past five years. The recovery of the US economy has led to a massive jobs spurt in the US private sector and halved the US unemployment rate to 5% – down from a peak of 10% in 2009.

The continued resurgence of the US can only be positive for Irish agriculture as it accounts for 8% of food and drink exports, valued at €740m in 2014.