This morning, Dr. Eric Rosengren, President and Chief Executive Officer of the Federal Reserve Bank of Boston, provided the keynote address at NAIOP’s well attended and informative program, “Banking on Real Estate: Capital Flows and the State of CRE Lending.”
As a result, until there is progress on the Fed’s mandates of stable prices and employment, he believes that the current Fed accommodative monetary policy is appropriate. For now, there is no reason to slow the economy down with a tighter monetary policy.
That said, he indicated that the Fed would, most likely, take decisive and forceful action if inflation expectations start to rise.
Based on Dr. Rosengren’s comments, I would say that all indications are that this period of historically low interest rates will continue for the foreseeable future. This is probably good news for current commercial real estate owners that are worried about the FDIC’s eventual implementation of a “mark to market” policy. Having to refinance property, with falling rental revenue, would be all the more difficult with rising interest rates. On the other hand, investors sitting on a lot of cash on the sidelines may still be sitting for a while longer.