Why the FED’s So Cautious About Cutting Rates

FED DELIVERS KEY MESSAGE FOR CRE INVESTORS​

New Inflation Data Shifts to Positive Trajectory​

• Following “bumpy” inflation readings that put rate cuts on hold, the downward inflation trajectory reasserted in May​

• The CPI inflation reading released on June 12th showed CPI and Core CPI falling; Core CPI hit lowest level since April 2021​

Federal Reserve Signals Potential Rate Cut in 2024 ​

• On the June dot-plot, fifteen of the nineteen members of the committee suggested the overnight rate will end this year lower than where it is today​

• Wall Street has baked-in a 60% likelihood of a rate reduction coming at the September Fed meeting​

Federal Reserve Remains Cautious​

• Although the Fed appears optimistic about the prospect of a rate cut this year, the messaging remains cautious and dependent upon future inflation and economic readings​

• Chairman Powell stated that even one cut will be very consequential to financial markets, so they will only pull the trigger if they strongly believe inflation is under control​

*Through May​
Sources: Marcus & Millichap Research Services, BLS​

​​Watch Video Below: