{"id":1004747831,"date":"2025-02-19T11:43:46","date_gmt":"2025-02-19T19:43:46","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004747831"},"modified":"2025-02-20T14:14:46","modified_gmt":"2025-02-20T22:14:46","slug":"capital-ideas-so-what-if-the-feds-not-independent","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/capital-ideas-so-what-if-the-feds-not-independent\/","title":{"rendered":"Capital Ideas: So What If the Fed’s Not Independent?"},"content":{"rendered":"
\n
\"Photo
Therese Fitzgerald<\/figcaption><\/figure><\/div>\n\n\n

During the very last session of last week\u2019s MBA-CREF conference, an audience member asked a question that got a big reaction from the panelists: How important is it for the Federal Reserve and its chairman, Jerome Powell, to remain independent of the President and of Congress? The consensus among the panelists was: It\u2019s critical.<\/p>\n\n\n\n

Moody\u2019s puts the \u201cutmost importance\u201d on Fed independence and has made the potential for a change in that status part of its risk matrix, said Kevin Fagan, senior director & head of economic research. The rating agency\u2019s position is \u201cwe should let the experts do what they do,\u201d he said.<\/p>\n\n\n\n

President Donald Trump is, at his core, a dealmaker, and commercial real estate is where he honed those skills. So there are CRE executives who secretly or not-so-secretly wish our new leader would get in there and engineer a lower cost of capital. Lowering short-term rates should help get property deals flowing again and give businesses and consumers more buying power. (Treasury rates, the key CRE borrowing benchmark rate, typically <\/em>fall when the fed funds rate falls, though the two haven’t tracked recently.)<\/p>\n\n\n\n

The president has expressed a desire to do just that. But as we know, Powell and the other Fed governors resisted pressure from the president and elected to pause the benchmark rate at 4.25 to 4.5 percent during their first post-inauguration FOMC meeting.<\/p>\n\n\n\n

Dueling objectives<\/h2>\n\n\n\n

The Federal Reserve was created by Congress as a central bank in 1913. The Fed, which has been independent of the Treasury Department since 1951, is responsible for monetary policy<\/em> with the goal of maintaining stability in the banking system and the economy.<\/p>\n\n\n\n

Currently, that goal is rubbing up against the administration\u2019s fiscal policy <\/em>goal of waking up a sluggish economy, said Victor Calanog, global head of research and strategy & chief economist for Manulife Real Estate Finance Group.<\/p>\n\n\n\n

People often would like the Fed to \u201cput the cape on\u201d to rescue the economy, Calanog said. And you could say it did just that in 2020 and 2008 when it dropped rates to the 0 to 0.25 percent range to stimulate borrowing. \u00a0\u00a0<\/p>\n\n\n\n

But, he said, other countries should serve as a cautionary tale for why our central bank should remain independent. \u201cWhen central banks lose independence, it debases a country\u2019s currency,\u201d he said.<\/p>\n\n\n\n

So while the U.S. is still seen as a safe haven for foreign investors, devaluing our currency would discourage that capital from coming here, further driving up our nearly $1 trillion trade deficit. \u00a0<\/p>\n\n\n\n

With the U.S. economy also facing the impacts of U.S.-imposed tariffs and an expiring tax law, for now Fed independence is a certainty in an uncertain world. But these are interesting times, and anything can happen.<\/p>\n\n\n\n

Yesterday, citing Article II of the Constitution, President Trump signed an executive order<\/a> that gives him oversight over all new regulations and the strategic agendas of the executive branch’s independent agencies, including the Federal Trade Commission, the Federal Communications Commission and the Federal Reserve. The one exception to the EO was the Federal Reserve’s monetary policy function.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The Federal Reserve’s role is up for debate since President Trump took office.<\/p>\n","protected":false},"author":756,"featured_media":1004706954,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21825,21684],"tags":[35492],"class_list":["post-1004747831","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-viewpoint","tag-federal-reserve"],"acf":[],"yoast_head":"\nCapital Ideas: So What If the Fed's Not Independent? - 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\/capital-ideas-so-what-if-the-feds-not-independent\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Capital Ideas: So What If the Fed's Not Independent?\" \/>\n<meta property=\"og:description\" content=\"The Federal Reserve's role is up for debate since President Trump took office.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/capital-ideas-so-what-if-the-feds-not-independent\/\" \/>\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=\"2025-02-19T19:43:46+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-20T22:14:46+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/03\/new-headshot-copy.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"804\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Therese Fitzgerald\" \/>\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\/capital-ideas-so-what-if-the-feds-not-independent\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/capital-ideas-so-what-if-the-feds-not-independent\/\",\"name\":\"Capital Ideas: So What If the Fed's Not Independent? 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She got her start writing about the New York City market with Real Estate Weekly and later joined CPE\u2019s predecessor publication, Commercial Property News, where she held various positions including editor in chief. In addition to working on the CPE and MHN websites, she edits CPE's Capital Markets Newsletter and MHN's Finance & Investment Newsletter. 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