Leaving many commercial real estate investors wondering what’s next, for only the 4th time in the last ten years, the Fed announced a interest rate rise in mid-June. This widely expected decision was made, according to the Federal Open Market Committee, because “…of realized and expected labor market conditions and inflation”. The committee added that it:
…expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate.
Writing in the New York Times, Binyamin Appelbaum notes that the markets were prepared for this:
Fed officials predicted three increases at the beginning of the year, but inflation has weakened in recent months. Investors will be looking for signs that the Fed is no longer quite so confident that the economy is ready for higher rates.
Fed announces rate hike decision
As widely predicted, the Federal Reserve announced today that it would raise interest rates by a quarter of a percent. “In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent,” the Federal Open Market Committee said in a statement.
But the Fed Is Indeed Looking Ahead
As they look into their crystal ball, there are indications that the Fed may have more up their sleeve that could impact commercial real estate investments. The rate hike announcement included this insight into their thinking:
…economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate.
However, they caution that “…the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”
Still No One Can Tell The Future
Even the Fed cannot tell what the economy will do in the future. That’s why René Nelson and her team stay up-to-date on market conditions and the economic climate both locally and across the country. Visit eugene-commercial.com or give her a call at (541) 912-6583.
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