The Bank of Canada raised its key interest rate by half a percentage point or 50 basis points this week, putting the new rate at 4.25 per cent.

It's also signaling it may pause its aggressive rate hike cycle.

Farm Credit Canada's chief economist J.P. Gervais says he hopes we've seen the worst of it.

"My message is that even if there is a major slowdown or even a recession, I would say don't expect interest rates to be lower in 2023."

That can create a dilemma for farms or operations that need to renew loans. 

He admits it's a challenge to try and determine if you should lock in long-term rates that are now lower than the short-term rates or do you actually go with short-term rates hoping that the next time you have to renew your loan you're going to be faced with low-interest rates.

"There's no unique solution here. I think all operations need to assess where they're at. Look at where they stand in terms of their balance sheet. What kind of risk exposure they have and make the decisions that best fit their operation."

He thinks we've seen most of the increases that we're going to see now and that 2023 will be more of a steady type of environment for interest rates.

Along with watching what's happening with interest rates, its also important to follow what's happening with the Canadian dollar.

Gervais says he's been surprised by the gains we saw with the dollar over the last few weeks, but he doesn't think that will continue.

"I do you think that we will have a global economic slowdown in early 2023. If there is a major global economic slowdown, I do think I would expect the U.S. dollar to gain value, and oil prices to come down a little bit."

He says because of all these reasons, he just doesn't see the Canadian dollar moving higher in early 2023.

He feels we could see it going lower than where it currently is.

To listen to Glenda-Lee's discussion with J.P. Gervais click on the link below.