Pressure Grows for Fed to Cut Rates, But Questions Remain

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Greetings!

Today’s newsletter is brought to you by TouchSource. Register for their August 8th webinar about how digital displays can boost property occupancy rates. The Federal Reserve's policy statement today, focusing on interest rates, is being watched closely by the real estate industry, which hopes for swift cuts despite the Fed's cautious stance.

Now let’s dig in!

Pressure Grows for Fed To Cut Rates, But Questions Remain

The Federal Reserve releases a policy statement today, followed by a press conference where Reserve Chair Powell will explain the Fed’s current stance on rates. The expectation is that the Fed will start bringing rates down at their next meeting in September, but there are still many questions about how quickly rates will be cut.

Most other modern economies around the world have already started dialing back their anti-inflationary measures. Canada has already lowered its interest rates. Sweden, known for following the U.S.'s lead on interest rates, has also cut its rate. The Bank of England is predicted to lower rates in its next meeting this week.

Elevated interest rates have had the desired effect of lowering inflation. Current core inflation is just above 3 percent, while other measures, like personal consumer expenditure inflation, are already nearing the Fed’s 2 percent target.

However, higher rates have also impacted the economy. GDP growth estimates are down, and unemployment continues to rise. The Fed has stated that its most important metric is inflation related to labor costs, which has ticked down to 4 percent but is still above normal. The Fed needs to be cautious, as rising unemployment could further slow the economy and become a talking point for the upcoming election.

Even if the Fed lowers rates in September, questions remain about how much and how fast they will continue to do so. The market is perhaps overly optimistic about the Fed’s stance on interest rates. Bond spreads suggest that rates will decrease by over two percent over the next year. However, a recent survey of the Federal Reserve Board showed a more muted view, predicting a decrease of only 1.25 percent by the end of 2025.

The real estate industry is hoping for rates to come down quickly. If the market is right, it might get its wish. However, the Federal Reserve is still concerned about what could happen if rates drop too quickly. If inflation stops decreasing or starts to climb again, the Fed will proceed with caution in its future rate cuts.

PRESENTED BY TOUCHSOURCE
Leveraging Digital Displays to Boost Property Occupancy Rates

Join TouchSource on August 8 at 12 pm MT / 2 pm ET for "From Vacant to Leased: Harnessing the Power of Digital Displays," and explore how digital displays can be used as a marketing tool for leasing your available spaces. TouchSource CEO Ajay Kapoor will share how to engage and inform prospective tenants when they arrive at properties unannounced, capture leads effectively without leasing agents needing to be present, and how you can dynamically showcase your property’s amenities. Don’t let unannounced visits turn into missed opportunities—learn how to leverage digital displays to boost occupancy rates.

Insider Insights

Pending sale
The sale of Colorado’s largest MLS to a private investor has gotten a “positive response” from members. The sale looks like it will go ahead even after another competing offer came in from the real estate software company MRI.

Jumping the ponds
Recent data has shown that for select European cities like Lisbon, the real estate market is being affected by American buyers who have become the “key prospective base” as they ride the strong dollar in search of a better standard of living.

Headlines

July 30, 2024 | Reuters
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