NTEREST GENERATOR - WHAT A HAWKISH FED MEANS FOR CRE INVESTOR
Updated: Apr 14, 2022
Highlights from Fed Meeting and Implications of a Hawkish Fed
What can members do?
Minutes from the latest Fed meeting were just released – Sentiment was hawkish
Fed reiterating possibility of 50 bps rate hike(s) at future meetings
Also began laying the groundwork for Quantitative Tightening (QT)
Timing unclear – “…commencement of balance sheet runoff at a coming meeting…”
Fed will let up to $95B per month expire; Previously was buying $125B per month
QT puts upward pressure on long-term rates (10-Year), reducing yield curve inversion risk
Overall, the state of the economy remains sound – Job growth, consumption, wage growth all very positive
Sustained elevated inflation and rising interest rates are bigger risks for CRE investors
Real estate is a great investment vehicle during times of inflation