Fed increases rates a quarter point and signals a potential end to hikes (CNBC)
The Federal Reserve approved its 10th interest rate increase in just a little over a year and dropped a tentative hint that the current tightening cycle is at an end.
The widely expected decision, which takes the fed funds rate to a target range of 5%-5.25%, was unanimous.
The post-meeting statement omitted a sentence present in the central bank’s March comments saying that “the Committee anticipates that some additional policy firming may be appropriate” for the Fed to achieve its 2% inflation goal.
Fed’s Latest Rate Hike Adds to Strain on Capital Markets (Connect CRE)
“It’s clear that Jerome Powell is sticking to his guns on fighting inflation,” said Zachary Streit, founder/managing partner, Way Capital. “One upshot of the hike, in conjunction with regional bank volatility, is that it’s an ever more challenging capital markets environment where it’s getting harder to get deals done every day.”
He added, “There are still quality deals to be done and financing to be had, if you have the structured finance experience and relationships to weather a difficult period. We have been highlighting and incorporating the forward-looking curve which suggests a steep decline in rates later this year and next year.”
Carlos Vaz, CEO of Conti Capital said the rate hikes “create strain for multifamily real estate because the rate increases press upward on the cost of debt. The multifamily market has already seen a marked slowdown in transaction volume in recent quarters, given how rising debt costs have widened the bid-ask spread. However, the ongoing housing shortage is contributing to sustained apartment demand."
About PSRS Founded in 1972, PSRS is a commercial mortgage banking firm that helps real estate investors of all sizes structure and secure financing solutions that align with their investment goals.
