The Commercial Real Estate Alpha Site

By Harriet Sinclair, Editor at LinkedIn News

The Federal Reserve is considering another interest rate hike of 0.75 percentage points at its September meeting, according to The Wall Street Journal, citing data from CME Group. The Fed has taken an aggressive approach to rates, hiking them by 0.75 percentage points in both June and July. Fed Chair Jerome Powell commented in August that the bank retained its commitment to lowering inflation, which remains at decades-high levels, even though the move could increase unemployment. “We will keep at it until we are confident the job is done,” Powell said.

• The market is anticipating a 0.75 percentage point rate hike, with traders pricing in the potential move.

John Toohig• Head of Whole Loan Trading at Raymond James• 

Fed watch. Remember, Nick Timiraos is the guy who got the call ahead of time for the “leak” of the first 75bps hike. His comments:

“Federal Reserve Chairman Jerome Powell’s public pledge to reduce inflation even if it increases unemployment appears to have put the central bank on a path to raise interest rates by 0.75 percentage point rather than 0.50 point this month”

After the Sept meeting, we have two more before year end. What’s next is the question? Another 75bps? 50bps? Further comments: 

“They face two main questions heading into their Sept. 20-21 meeting that are likely to determine whether to approve another 0.75-point rate rise: How much higher do they expect to raise rates in coming months, and what steps do they take to get there?”

“Several officials have signaled a desire to raise the fed-funds rate closer to 4% by year’s end—or about 1.5 percentage point higher than its current level. That could be accomplished in rate increases of various sizes at each of the three remaining Fed meetings this year”

“The hawkish approach would point to a 0.75-point rate rise at the coming meeting, followed by smaller increases at the next two, analysts said”

“Another option would be to raise rates by a half percentage point at each of the remaining meetings this year”

“Officials are trying to convey their expectations that rates will need to stay higher for longer, and “one way to send that message is with a third 0.75-point hike”

#rates #economy #fed