What the December FED Meeting Means For CRE in 2023
Fed Slows The Pace Of Rate Hikes
As expected, the Federal Reserve raised the overnight rate 50 bps to a lower bound of 4.25%, following 4 consecutive 75 bps lifts
Chairman Powell suggested that the terminal rate may have risen, but set expectations for a slowing pace of increases over the course of 2023
Why Is The Fed Easing Rate Movement
While inflation of 7.1% is well above the 2% target, this figure has fallen 110 bps since September
Other key indicators like housing, car prices, and gas prices slipped from recent peaks towards the end of 2022
What This Means For CRE Markets
Slower, smaller rate increases will reduce uncertainty and give the market time to recalibrate. That will help narrow the buyer/seller expectation gap.
If the Fed continues down the path of smaller hikes in 2023 and inflation manages to ease, we could see buyer competition for assets heat up quickly.
*10-Year Treasury through December 14, 2022
Assumes one 25-50 bps hike at the FOMC meeting in February 2023
Sources: Marcus & Millichap Research Services, Federal Reserve
