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A Fed Hike & The Door is Still Open to More...
July 27, 2023
- The Fed raised interest rates +25bp to 5.25%-5.5% at today’s FOMC meeting. The decision was unanimous, and the Fed statement repeated many of the same messages from the previous meeting.
- The FOMC statement noted again that “the Committee remains highly attentive to inflation risks.” The door is still open to future rate hikes, and September is a live meeting (but not guaranteed).
- Chair Powell noted in his press conference that the U.S. labor market remained tight. Labor demand still exceeds labor supply – though some progress is being made. Powell is still guarding against backing off too soon. The “stop and go” policy of the 1970s needs to be avoided – we don’t want to underestimate that fact.
- The Fed staff is no longer forecasting a recession as the base case.
- Powell also noted that the FOMC was not close to considering rate cuts (perhaps in future years, but not any time soon).
- Bottom line: without confidence in their future inflation forecasts, the FOMC seems to want some insurance that the anchor will hold. That likely (still) requires future U.S. growth falling below trend – for some time. The bigger mistake would be losing price stability now.
Sources: Don Rissmiller, Strategas
Loan Program Spotlight
Investor Flex Program
DSCR LOANS ALLOW BORROWERS TO FINANCE UP TO 20 PROPERTIES BY USING EACH PROPERTY’S MONTHLY RENTAL INCOME TO QUALIFY FOR INVESTMENT PROPERTIES
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Plus, long-term real estate investors can elect to add a 1-, 2- or 3-year pre-payment penalty in exchange for better pricing.* As long as they don’t pay off or sell the property within the agreed-upon pre-payment period, they’ll benefit from savings that can be used elsewhere.
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