November Fed Rate Increases Impact On CRE Markets

What Action Did the Fed Take?

• On November 2nd, the Federal Reserve raised the overnight rate 75 basis points to the 3.75%-4.00% range

• Inflation remains elevated and the Fed reiterated its commitment to pushing inflation back down to 2%

Forward Looking Expectations Moderate

• The Fed provided forward guidance to expect further rate increases in December and in 2023

• Chairmen Powell indicated that future rate increases will likely be smaller but there may be more depending on upcoming inflation data

What CRE Investors Should Be Considering

• In the past, federal reserve rate increases have translated into higher borrowing costs for investors

• Smaller and slower rate increases, as suggested by chairmen Powell, could help reduce the buyer-seller expectation gap