CRE Risks, Rapid Economic Expansion Could Force Fed To Raise Rates Quicker

Fed Chair Janet Yellen signaled two possible interest rate moves for the year following this month's rate hike, but now Fed governors are estimating three move moves at a faster pace than originally projected.

Boston Fed President Eric Rosengren said implementing quicker rate hikes would do two things — one, keep investors from taking excessive risks in commercial real estate, and two, properly reflect the strength of the U.S. economy, the Wall Street Journal reports. San Francisco Fed President John Williams said that while he still expects only two more hikes this year, he would not rule out the possibility of a third.

But not everyone is clamoring for three more moves this year. One of Yellen’s closest allies, Fed Vice Chairman Stanley Fischer, recently said he forecasts only two more hikes for 2017.

The increase in rates to a range of 0.75% to 1% in March was of little surprise to investors, and commercial real estate economists had overwhelmingly predicted it based on the economy’s continued recovery and February’s strong jobs report. It was the second quarter-point increase in benchmark rates implemented since December's move — prior to that the Fed had not moved rates since December 2015.

Continue reading this story with a free account

Log in or register
Sign up for more articles like this
Subscribe to Bisnow's National Newsletters
Related Stories

LS Power Raises $6B To Capitalize On Data Center Power Demand

DHS Buys 3 More Detention Facilities From The Geo Group For $950M

CRE Finance Sentiment Index Falls To 3-Year Low As Economic Fears Mount

Oprah-Backed Health Food Chain Files For Bankruptcy, Seeks To Exit Leases

Fund Affiliated With Michael Dell Takes $1B Swing At Senior Housing

Multifamily's Days As Commercial Real Estate's 'Golden Child' Are Over

Denver Construction Costs On The Rise, Surpass National Increases

Real Estate Fundraising Shrinks, Targets Get Smaller

Structural Design Decisions Can Box Owners In. The Right Partner Can Help Them Make More Informed Decisions

How Structural Engineers Support Modern Healthcare Construction

Life Insurers Writing Riskier Loans To CRE, Setting Off Alarm Bells

Lawmakers Are Canceling Data Center Tax Breaks. Developers Are Learning To Adapt