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Special Report

Capital Markets: Back to the Future

April 2022

Fed Takes Page from Past Playbook, Raising Interest Rates;
Commercial Real Estate Expected to Perform Well

Federal Reserve officially kicks off period of rising rates. On Wednesday, March 16, the Fed approved a 25-basis-point rate increase, the first since December 2018. While the hike was a bit of a reality check for commercial real estate owners and lenders alike, the main cause of concern was the FOMC’s post-meeting comments. This release verified inflation concerns and the many rate hikes that may be coming over the next year and a half to alleviate them. The Fed also indicated the possible magnitude of the rate hikes. Based on recent comments by Chairman Powell, it seems likely that the Fed will increase rates by another 50 basis points in early May, with potentially another five or more hikes resulting in a Fed Funds rate in the 1.90 percent to 2.50 percent range by the end of the year.  Some forecasts expect even more rate increases in 2023.

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