The Federal Reserve Open Market Committee announced some significant changes in monetary policy: a faster tapering of bond purchases and the possibility of as many as three rate hikes next year. The reasons are concern about inflation, which has been more dogged than the institution had expected, and an improved job landscape. The question for commercial real estate is how the combinations of actions will affect markets.

The Fed stopped referring to inflation as "transitory," acknowledging the condition could last longer than expected. 

"In light of inflation developments and the further improvement in the labor market, the Committee decided to reduce the monthly pace of its net asset purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities," the Fed noted on Wednesday. "Beginning in January, the Committee will increase its holdings of Treasury securities by at least $40 billion per month and of agency mortgage‑backed securities by at least $20 billion per month."

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.