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February FED Meeting CRE Implications

February 7, 2023 by Marcus & Millichap Research Services

How Will The CRE Market React To The February Rate Hike?

Fed Slows Rate Increases

  • On February 1st, the Federal Reserve announced a rate increase of just 25 bps, the smallest increase since March last year
  • Chairmen Powell declared we are seeing disinflation, supported by several consecutive months of easing CPI, PCE, and PPI inflation measures

How Does This Impact Forward Looking Expectations

  • While the Fed was eager to project continued increases in 2022, Chairmen Powell is once again suggesting a slower moving approach
  • A 25-bps lift in March remains likely, but Chairmen Powell’s posturing has shifted

How will this Impact CRE Investors

  • With rate hikes slowing and recession expectations easing, the probability of a soft landing is gaining momentum
  • Lending rates have begun to ease, potentially reducing some of the upward pressure on cap rates

*10-Year Treasury through February 1, 2023
Assumes three 25 bps hikes at subsequent FOMC meetings.
Sources: Marcus & Millichap Research Services, Federal Reserve

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Filed Under: Research Brief

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2020 Marcus & Millichap and Limon Net Lease Group

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