Fed Begins Raising Rates: What this Means for CRE

March 24, 2022

The Federal Reserve kept its promise and began raising interest rates by a 1/4 point in March 2022. Projections show that there may be six similar rate increases this year, and multiple hikes in 2023, with even more aggressive increases being considered by Fed Chair Powell in order to bring down the high inflation rate.

Cushman & Wakefield's Head of Economic Analysis & Forecasting, Rebecca Rockey, and Senior Economist James Bohnaker, examine the variables leading to today's rate and inflation environment, and how this recovery will differ from those in the past.

"The post-great financial crisis expansionary cycle was characterized by financial havoc and contagion, tight credit conditions, deleveraging and sluggish growth, all of which resulted in below target inflation. The pandemic recovery, conversely, has been free of those characteristics. Instead, swift and historic fiscal and monetary support avoided poor credit outcomes. Regulatory changes behind the scenes provided flexibility to the financial system to adapt. And various legislative and regulatory actions provided significant income support for state and local governments, businesses and households."

The downside to the rapid response and recovery to the pandemic? Rockey and Bohnaker point out "a demand surge at a time when supply chains are still scrambled, resulting in high rates of inflation for many goods and services." 

Overall, it is still believed that long-term inflation will settle at 2%. "The idea is that higher rates will slow demand and bring inflation back under control. In other words, it is not a given that expectations remain anchored: they hinge on the faith placed on the FOMC to achieve its stable inflation mandate," remark Rockey and Bohnaker.

Experts agree that raising the federal fund rates is a necessary step to stabilize the markets, and that the property sector will ultimately benefit.

"The financial market knew this was coming and had already priced in seven rate hikes this year. The 10-year Treasury yield has already captured these expected rate movements, which is partly why it has drifted up in recent weeks. Chair Powell even alluded to that while monetary policy acts with a lag, recent movements in the market have essentially helped the Fed and began some of the tightening effects sooner. This is what Fed credibility looks like."

To read their full analysis on the impact of increased rates on CRE, click here

©2023 Greystone & Co. II LLC. All Rights Reserved. Loan products are offered through Greystone Servicing Company LLC, Greystone Funding Company LLC, and/or affiliated companies. All securities transactions are effected through INTE Securities LLC, member FINRA ( / SIPC ( To view INTE Securities LLC, go to