Tomorrow’s Fed Meeting: What Experts Are Watching For
The Federal Open Market Committee’s rate decision comes at a politically tense moment for the organization.
While the commercial real estate industry enjoyed three interest rate cuts in a row in the back half of 2025, it seems likely that the Federal Open Market Committee will press the brake and hold steady on any further cuts tomorrow. CME Group’s FedWatch tool currently places a 97.2 percent chance that the FOMC will leave rates the same.
While it might be tempting to wish for a rate cut, several industry executives who spoke to Commercial Property Executive said that holding rates steady might actually be what’s best for commercial real estate right now because of the stability that it offers.
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“Stability gives buyers, sellers and lenders more confidence to move forward instead of staying on the sidelines,” said Karine Aslanian, a broker associate and commercial advisor at The Agency, a Los Angeles-based brokerage firm.
Additionally, another rate cut right now could signal that the Fed is concerned about the labor market, which would also not be good for real estate, according to Allan Swaringen, managing director at LaSalle Investment Management and president & CEO of JLL Income Property Trust.
“That greater concern about employment probably pulls through into a concern about the broader economy,” Swaringen told CPE, “and the one thing worse than uncertainty around interest rates as it relates to real estate is uncertainty about the direction of the economy.”
Swaringen noted that two employment reports and two inflation reports will be released before the FOMC’s next meeting in March, which will provide the committee with a more informed view of the economy than they would have right now.
Watching for independence
President Donald Trump has not made it a secret that he wishes the FOMC would more aggressively cut rates. Trump has attempted to remove Lisa Cook from the Federal Reserve Board of Governors, and the Department of Justice has initiated a criminal investigation into Jerome Powell, whose term as chair ends in May.
“There is a strong incentive for the Fed to reinforce its independence, particularly in a politically charged year,” said Dwight Dunton, CEO of Bonaventure. “Absent a clear deterioration in economic conditions, staying on hold allows them to maintain credibility while preserving optionality for later in the year.”
The implications for CRE
A short-term pause in rate cuts is unlikely to meaningfully impact most commercial property market trends, according to Altus Group Senior Director of Research Omar Eltorai, especially given the expectation for further cuts later in the year and the current status of the Treasury yields.
“While rate cuts would certainly be welcomed by, and benefit, the commercial real estate market,” Eltorai noted, “the more important portion of rates to watch now is the Treasury market, where there have been meaningful moves even in the absence of Fed Funds (and) policy rate changes.”
This sentiment was echoed by Swaringen, who said that while global volatility could contribute to upward pressure on the 10-year Treasury, stability for that figure will be the most important factor for commercial real estate.
“Investors often borrow against the short end of the curve with some spread, but valuations of real estate are based upon the long end of the curve,” Swaringen said. “And those have been stable, and we think it’s very important that the long bond is predictable and stable, and (the) noise about what’s going on in the world hopefully settles down.”
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