During the last six months, The Federal Reserve has acted aggressively to thwart the COVID economic crisis. It pushed interest rates to near zero and purchased massive amounts of securities. Add these moves to the $2.2 trillion CARES Act, and you have an enormous increase in money supply and the federal budget deficit.

In a new report, Patrick Lynch, vice president of Research and Analytics Middleburg Communities, wonders, like many observers, if these moves will create inflation in the future. And if so, will the multifamily asset class continue its traditional role of providing a hedge. 

To help predict the future, Lynch looks back to the 1970s—the last time the US experienced a significant rise in inflation—and compared the annual average rate of rent growth to the average inflation rate from 1973 to 1983 by studying three data sources.