Federal Reserve Pauses on Interest Rates (For Now)

After a 15-month interest rate hike increases, in mid-June, the Federal Reserve hit pause on increasing the interest rate, for now. By mid-month, Chairman Powell cautioned, “don’t expect the most recent rate hike pause to continue.”

However, he went on to say, “Price stability is the responsibility of the Federal Reserve, and without it, the economy does not work for anyone.

In other words, inflation must return to the 2% level that the Fed and other banks say is the desired level. Look for the Fed to provide additional interest rate hikes as well as continued quantitative tightening, reducing the amount of liquidity in markets.

Because inflation pressures continue, the process of getting inflation back down to 2% has a ways to go. “The Fed’s forecasted terminal rate increased another 50 bps, doubling down on a “higher for longer” run on rates. Although we have been expecting a recession for the past 10 months, there has been no sign of any economic downturn in the United States.

That said, the continued rate increases most certainly will push the economy into a recession, potentially within the year.

You might ask, what is the best way to be successful in a recession? Plan. Take advantage of opportunities, such as buying low. Know your company’s strengths and weaknesses and capitalize on them. Cut unnecessary costs. Make everything you do count!

As with the Great Recession, there will be opportunities. Keep your eyes peeled, ears open and work with an advisor to help you get the most bang for your commercial real estate buck.