Financial Markets Research Brief
Structural Inflation Drivers Prompt Rate Hike;
Real Estate Capital Markets Responding
Federal Reserve enacts fifth rate hike of the year. Following accelerated core CPI inflation and ongoing above-average hiring last month, the Federal Reserve raised the overnight lending rate 75 basis points at its September meeting. This is the third consecutive rate hike of this magnitude, extending the target range of the federal funds rate above 3 percent. September also marked an increase in the level of Fed balance sheet reductions, to an estimated $95 billion per month. These quantitative tightening measures are applying substantial upward pressure to interest rates, with the aim that greater borrowing costs will help bring commercial and consumer demand back in line with supply, and temper the current elevated inflation environment.