The Federal Reserve’s Monetary Policy Report to Congress comes out twice a year. The first one for 2024 suggests a number of things. Two of note for the commercial real estate industry: CRE remains a factor in continued risk to the banking system and interest rates aren’t coming down until the Fed has “greater confidence” that inflation is moving toward 2%.

Too bad that CRE hasn’t hit bottom and while things came in as expected for the Fed’s favorite metric for core inflation, the report still suggests everyone will be waiting for rate cuts. At least one former Fed economist, Claudia Sahm, has noted that July 31, 2024 is likely the earliest possible date for a rate cut. FOMC [Federal Open Markets Committee, which sets rates] votes on July 31, giving it six months of CPI, core PCE, and employment for 2024, he writes. “Six months is a nice, responsible-sounding number.”

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Erik Sherman


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