{"id":1004331989,"date":"2019-06-20T04:54:52","date_gmt":"2019-06-20T12:54:52","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004331989"},"modified":"2019-06-20T07:11:04","modified_gmt":"2019-06-20T15:11:04","slug":"industry-watches-as-fed-says-no-rate-cut-for-now","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/industry-watches-as-fed-says-no-rate-cut-for-now\/","title":{"rendered":"Industry Watches as Fed Says No Rate Cut\u2014For Now"},"content":{"rendered":"
\"\"<\/a>

Federal Reserve Board building. Image courtesy of AgnosticPreachersKid via Wikimedia Commons<\/i><\/p><\/div>\n

The U.S. central bank said on Wednesday it would keep the benchmark interest rate within a target range of 2.25 to 2.5 percent, while hinting at the possibility of rate cuts in the future, if the current economic expansion continues to weaken.<\/p>\n

The outcome of the two-day meeting of the U.S. Federal Reserve and subsequent press conference by Chairman Jerome Powell was closely watched by market participants, including commercial real estate investors, whose business decisions are affected by borrowing costs.<\/p>\n

Traders are now convinced there will be at least one rate cut next month. While the Fed holding firm on interest rates did not come as a surprise, monetary policy may be tighter this year than many observers expected. \u201cThe market is ahead of the Fed in terms of the magnitude of rate cuts, yet they interpreted the all-clear for a July cut as good news<\/em>,\u201d noted Savills Chief Economist Heidi Learner to Commercial Property Executive<\/em>.<\/p>\n

\u201cThe market had expected roughly two and a half rate cuts for this year, and at this point, based on the forecasts from the Federal Open Market Committee participants, only two cuts are penciled in for 2019<\/em>,” Learner added.<\/p>\n

Inflation still in check<\/h2>\n

The split vote by the committee\u2014one official voted to reduce the rate\u2014as well as language indicating that economic growth is flagging suggested to many observers that a rate cut is on the way. Moreover, the Fed acknowledged that its inflation estimate, now at 1.5 percent for the year, is running below its 2 percent objective.<\/p>\n

\u201cSo long as the other \u2018I\u2019 word, inflation, remains in check, the Fed isn\u2019t under great pressure to raise rates,\u201d<\/em> commented Spencer Levy, chairman of Americas research and senior economic advisor for CBRE.<\/p>\n

This will come as good news to many in the commercial real estate industry who are wary of escalating borrowing costs. Industry executives surveyed by Seyfarth Shaw shortly after last December\u2019s quarter-point rate hike identified rising interest rates<\/a> as their top concern for the year.<\/p>\n

On the other hand, rate cuts have the potential to fuel a dangerous asset bubble and could signal economic weakness, which tends to be associated with lower employment and earnings. This could put a damper on growth in real estate income and valuations.<\/p>\n

\u201cObviously the commercial real estate markets don\u2019t like volatility, they don\u2019t like the fact that we\u2019ve been in a late-cycle environment now for several years,\u201d<\/em> Levy said. \u201cAnd so I think there\u2019s been a measure of increased caution, certainly among core investors in equity.”<\/em><\/p>\n

He added: \u201cBut what we have seen because of the drop in interest rates on the long end of the curve, is a tremendous refinancing opportunity among borrowers who have had short-term debt. There is greater activity within debt and structured finance.\u201d<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The Federal Reserve opened the door to an easing of monetary policy next month, which is good news and bad news for real estate investors.<\/p>\n","protected":false},"author":744,"featured_media":1004332004,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,23891,21742],"tags":[32789,32808,38798,38329,34107,43391],"class_list":["post-1004331989","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-national","category-latest","tag-cbre","tag-federal-reserve-bank","tag-heidi-learner","tag-jerome-powell","tag-savills","tag-spencer-levy"],"acf":[],"yoast_head":"\nIndustry Watches as Fed Says No Rate Cut\u2014For Now - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/industry-watches-as-fed-says-no-rate-cut-for-now\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Industry Watches as Fed Says No Rate Cut\u2014For Now\" \/>\n<meta property=\"og:description\" content=\"The Federal Reserve opened the door to an easing of monetary policy next month, which is good news and bad news for real estate investors.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/industry-watches-as-fed-says-no-rate-cut-for-now\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2019-06-20T12:54:52+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-06-20T15:11:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2019\/06\/Federal_Reserve_Board_Building.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Greg Isaacson\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/industry-watches-as-fed-says-no-rate-cut-for-now\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/industry-watches-as-fed-says-no-rate-cut-for-now\/\",\"name\":\"Industry Watches as Fed Says No Rate Cut\u2014For Now - 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