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