{"id":154289,"date":"2023-06-21T15:19:52","date_gmt":"2023-06-21T21:19:52","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=154289"},"modified":"2024-02-27T11:31:48","modified_gmt":"2024-02-27T18:31:48","slug":"summary-of-june-2023-federal-reserve-meeting","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/summary-of-june-2023-federal-reserve-meeting","title":{"rendered":"Did We Reach the End of Rate Hikes? What Happened in Last Week&#8217;s Federal Reserve Meeting"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC4392519071\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">The big news to come out of last week\u2019s Federal Open Market Committee meeting was the group\u2019s choice to forgo another rate hike.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Previously, the central bank had increased interest rates at every meeting since March 2022 (with 10 rate hikes in total). The June decision marks the Fed\u2019s first rate pause in over a year.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Fed. Chair Jerome Powell revealed as much in his post-meeting briefing with reporters. He also delved into key real estate topics\u2014including the impacts of a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/the-biggest-crash-imaginable-is-coming-for-commercial-assets\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">potential commercial real estate crash<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and a housing market \u201cbottom.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Here are the takeaways:<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Commercial Real Estate<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Powell and Co. are apparently taking a possible crash in CRE \u201cvery seriously\u201d\u2014and particularly, the potential impact that could have on the banking industry.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The problem, he says, comes down to the large share of commercial property-backed loans that smaller and more regional banks hold. If CRE owners default on their loans thanks to waning office space demand (vacancies now sit at 13%, according to CoStar), banks with heavy CRE holdings feel the burn. In fact, at Signature Bank\u2014which&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/how-did-svb-collapse-in-48-hours\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">went under back in March<\/span><\/a><span data-preserver-spaces=\"true\">, 45% of its loan portfolio was CRE-backed.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Should demand for office space continue to weaken, it could lead to more closures in the small bank world. Beyond that sector, though, Powell doesn\u2019t expect a CRE downtrend to have a large systemic impact.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cWe do expect that there will be losses,\u201d Powell said. \u201cThere will be banks that have concentrations, and those banks will experience larger losses.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Powell says the Fed is monitoring the situation closely and will factor CRE performance into its future rate decisions. Currently, though, it seems the potential damage is contained.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cIt feels like something that will be around for some time, as opposed to something that will suddenly hit and work its way to systemic risk,\u201d Powell said.<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_6493696e9a886: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_6493696e9a886\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/summary-of-june-2023-federal-reserve-meeting', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/summary-of-june-2023-federal-reserve-meeting',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/summary-of-june-2023-federal-reserve-meeting', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">A Housing Market \u201cBottom\u201d<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Powell also touched on the housing market in his comments, nodding specifically to just how \u201cinterest sensitive\u201d the industry is\u2014and how that might impact the market moving forward.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While the Fed\u2019s rate hikes don\u2019t directly impact long-term mortgage rates, they do tend to move in a similar direction. And since the Fed began increasing its rate last March, 30-year mortgage rates have climbed from 3.89% to the 6.7% they sit at today, according to Freddie Mac.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cActivity in the housing sector remains weak, largely reflecting higher mortgage rates,&#8221; Powell said. &#8220;It&#8217;s the first place, really, or one of the first places, that&#8217;s either helped by lower rates or is held back by higher rates. And we certainly saw that over the course of the last year.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">He\u2019s right. Demand retreated on the backs of higher mortgage rates, and sales and prices both fell steadily for months. That seemed to turn the corner early this year, though, when prices began climbing\u2014albeit only slightly\u2014according to the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/fred.stlouisfed.org\/series\/CSUSHPINSA\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Case-Shiller Index<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Powell says this might be a sign that we\u2019ve hit\u2014and already started to recover from\u2014the market\u2019s bottom. Will it be a fast recovery, though? Likely not, at least until mortgage rates turn around.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cWe now see housing putting in a bottom and maybe moving up a little bit,\u201d he said. \u201cI do think we&#8217;ll see rents and house prices filtering into housing services inflation, and I don&#8217;t see them coming up quickly. I see them wandering around at a low level.&#8221;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Looking ahead<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">This month\u2019s Fed meeting shouldn\u2019t be taken as a sign that the bank is done raising rates. While its moves have brought inflation down slightly, we\u2019re still not at the 2% level the Fed\u2019s looking for. And per the FOMC\u2019s newest projection materials, the majority of FOMC members expect at least two more 25-point rate hikes this year.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The Fed will meet four more times this year: July, September, October, and December. The CME Group\u2019s FedWatch Tool currently has the chance of another rate bump at 74% for its July 25-26 meeting.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_2cb129fdfec813ee2a18595e190a8cde\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_6908d7652af5a085916d1adf1c2f4a0d\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_9ba31d589135204ac0acebb9f6afe686 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/summary-of-june-2023-federal-reserve-meeting&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/summary-of-june-2023-federal-reserve-meeting&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The big news to come out of last week\u2019s Federal Open Market Committee meeting was the group\u2019s choice to forgo another rate hike.&nbsp; Previously, the central bank had increased interest [&hellip;]<\/p>\n","protected":false},"author":613679,"featured_media":154294,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7383,7119],"tags":[],"class_list":["post-154289","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/154289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613679"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=154289"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/154289\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/154294"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=154289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=154289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=154289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}