Interest Rates on the Rise for the 10th Consecutive Time

The Federal Reserve’s policy-making committee has voted to raise its target rate by 25 basis points, marking the 10th consecutive rate increase and bringing the policy rate to between 5% and 5.25%. The decision was unanimous, but the statement removed language suggesting that ongoing increases would be appropriate, indicating that a pause in further rate hikes may be coming. The chairman of the Federal Reserve Board, Jerome Powell, noted that future policy decisions will depend on incoming data and will be made on a month-to-month basis as conditions change. The decision to raise interest rates will likely further tighten the already tight debt market, with banks reducing lending amounts and raising loan costs. Commercial real estate transaction markets are increasingly locked up, and activity is down by 55% compared to the first quarter of 2022. Other data indicates an economic slowdown, with factory activity contracting and the services side of the economy slowing. Despite this, Chair Powell has emphasized the committee’s focus on inflation, particularly the personal consumer expenditures price index for services outside of food, energy, and housing services, which has remained persistent and necessitates continued monetary policy restraint. 



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