Fed Intimates Interest Rate Hikes May Come as Early as 2023 by Christopher Sanz, JD, LLM

Posted on July 27, 2021

The Federal Open Market Committee concluded its June meeting, keeping interest rates steady and reiterating its position that current inflationary pressures are transitory. However, in a post-meeting press conference, Federal Reserve Chairman Jerome Powell remarked, “As the reopening continues, shifts in demand can be large and rapid and bottlenecks, hiring difficulties and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect.” Should this be the case and the Fed reaches its dual mandate of full employment and 2 percent inflation sooner than expected, investors can prepare for a rate hike as soon as 2023, one year earlier than previously projected.

Rising interest rates due to inflation and strong economic growth could bode well for commercial real estate investors, especially when leases include rent increases that keep pace with inflation or when leases are nearing the end of their terms. One of the keys to successfully managing through these times is working with experienced real estate advisors with well-located properties and deep tenant relationships.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.