When your business model depends on financing, of course you focus on what decisions the Federal Reserve will make about raising interest rates. The benchmark federal funds rate, which is a target range that only directly affects how banks lend to one another, is massively influential. Any doubt, just look at the current going rate for financing in commercial real estate.

But it's important not to forget other information. The Federal Reserve Bank of San Francisco issued an economic letter on Monday, noting that monetary policy is tighter than the federal funds rate.

It's important knowledge because monetary policy affects much more than inflation. Amount of available capital is one, and that has been a factor in influxes of investment into commercial real estate that have helped drive prices higher and cap rates lower.

Continue Reading for Free

Register and gain access to:

  • Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

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