November FED Rate Increases Impact On CRE Markets

What Action Did the Fed Take?

• On November 2nd, the Federal Reserve raised the overnight rate 75 basis points to the 3.75%-4.00% range
• Inflation remains elevated and the Fed reiterated its commitment to pushing inflation back down to 2%

Forward Looking Expectations Moderate

• The Fed provided forward guidance to expect further rate increases in December and in 2023
• Chairmen Powell indicated that future rate increases will likely be smaller but there may be more depending on upcoming inflation data

What CRE Investors Should Be Considering

• In the past, federal reserve rate increases have translated into higher borrowing costs for investors
• Smaller and slower rate increases, as suggested by chairmen Powell, could help reduce the buyer-seller expectation gap

*Through November 3
Assumes one 50 bps hike at the subsequent FOMC meeting
Sources: Marcus & Millichap Research Services, Federal Reserve

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