Investor Insights from The Fed’s March Meeting Minutes

Fed To Take More Hawkish Approach to Combat Inflation

• Fed could implement 50 bps increases to overnight rates if inflation remains elevated, up from expected 25 bps
• Could raise overnight rates more than 200 bps this year

Balance Sheet Reduction Coming Soon

• After doubling their balance sheet during the pandemic, the Fed will begin reducing Treasury and MBS holdings
• This Quantitative Tightening should push-up longer term interest rates, would reduce risk of yield curve inversion
• Could push 10-Year Treasury above 4% by year-end

Investors Should Remain Vigilant of All the Moving Parts

• Focus on investment strategies that mitigate inflation risk and prepare for a substantial rise in interest rates
• Economic growth fundamentals remain strong, so if a recession occurs, it will be milder than recent ones
• CRE vacancies for most property types remain very low, rent growth is strong, and the investment climate is sound

*As of April 07, 2022
Sources: Marcus & Millichap Research Services, Federal Reserve

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