Headline inflation increased 0.6% during August – the most in more than a year according to the latest CPI report. The resulting economic uncertainty is impacting business decisions, effectively slowing economic activity. The Fed’s job to discern the appropriate amount of tightening to achieve its goal of 2% inflation is complicated by the variable lags and current events - such as the potential government shutdown in November. The effects of monetary changes exhibit themselves with variable lags over a long period. 17, 2023) - Declining inflation pressures this year have allowed the Federal Reserve to respond with a more gradual pace of interest rate increases since May as it assesses the impact of its most aggressive monetary tightening of the last 40 years. Who’s well-positioned to benefit from this uncertain environment.Federal Reserve’s Bank Term Funding Program (BTFP).Immediate effects of monetary policy tightening.Exogenous factors impact our industry, but for many the cycle reset is what they have been waiting for and is long overdue.” “Market participants understand nothing is linear. “As the real estate cycle resets, so do return expectations,” DeHarty said. DeHarty expects life insurance companies to continue gaining market share on commercial real estate loan origination due to healthy balance sheets – which also differentiates sponsors with ample liquidity. 15, 2023) - Jeff DeHarty, senior vice president in Northmarq’s Denver office, recently authored an article in the Colorado Real Estate Journal, titled “ Capital constraints within a tightened monetary policy.”Īs the commercial real estate sector adjusts to the steepest Federal Reserve rate increases in the last 35 years, DeHarty shared his thoughts on the current state of the capital markets and opportunities ahead.ĭespite higher interest rates and lower transaction volumes, lenders remain active and DeHarty noted loan originations for life insurance companies, agencies and banks all increased in the second quarter of 2023 compared to the first quarter.
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