Implications of Federal Reserve Rate Policy
What The Economy’s “March Madness” Means for CRE Investors
Rising Rates Spark Bank Failures; Government Response Rapid
The banking industry recorded the 2nd and 3rd largest bank failure in U.S. history from March 10th to 12th, with Silicon Valley Bank and Signature Bank closing their doors
The FDIC has pledged to insure all deposits at Silicon Valley Bank and expand the discount window, limiting spillover effects into other parts of the economy and banking sector
Expectations For March Fed Meeting Shifting Rapidly
Prior to the banking crisis, expectations were for a 50 bps rise to the fed funds rate at the March 22nd meeting, based on Powell’s comments on Capital Hill
Wall Street has reversed course after the bank closures, with the expectation favoring a 25-bps lift in the overnight rates
Takeaways for Commercial Real Estate Investors
The slower pace of rate hikes will give CRE lenders and investors time to adjust and assess the market
Investment market is to remain choppy in the near-term, but a more stabilized interest rate outlook will create narrowing of the buy-sell gap
Through March 15
Sources: Marcus & Millichap Research Services, CME Group
