How Will The CRE Market React To The February Rate Hike?
Fed Slows Rate Increases
- On February 1st, the Federal Reserve announced a rate increase of just 25 bps, the smallest increase since March last year
- Chairmen Powell declared we are seeing disinflation, supported by several consecutive months of easing CPI, PCE, and PPI inflation measures
How Does This Impact Forward Looking Expectations
- While the Fed was eager to project continued increases in 2022, Chairmen Powell is once again suggesting a slower moving approach
- A 25-bps lift in March remains likely, but Chairmen Powell’s posturing has shifted
How will this Impact CRE Investors
- With rate hikes slowing and recession expectations easing, the probability of a soft landing is gaining momentum
- Lending rates have begun to ease, potentially reducing some of the upward pressure on cap rates
*10-Year Treasury through February 1, 2023
Assumes three 25 bps hikes at subsequent FOMC meetings.
Sources: Marcus & Millichap Research Services, Federal Reserve
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