Inflation rose modestly last week, as the July CPI checked in at a 3.2% annualized rate, slightly above the June read, but below analysts’ expectations. While I don’t think this will be enough of a move to force the Fed to raise rates again, the rest of the yield curve continues to increase.
A wave of multifamily maturities has been building for the better part of three years. Loans originated in late 2020 and 2021, held historically low initial interest rates, and experienced some of the fastest rent growth in history during their first year.
The Fed raised interest rates once again last week, bringing the benchmark short-term rate to a range of 5.25-5.50%. The change has had a very mild impact on capital markets, as major equity indices, commodity markets and long-term interest rates increased modestly.
Economists will be focused this week on monetary policy as well as the first release of Q2 GDP. The Fed will meet on Tuesday and Wednesday, and while most forecasters anticipate another 25-basis point increase in interest rates, expectations are mixed on whether or not the Federal Open Markets Committee will raise interest rates again after this week.
The June consumer price index showed weaker inflation than economists estimated, with prices rising 20 basis points month-over-month. On an annual basis the CPI increased 3.0%.
As we approach the end of the second quarter there will be two key economic indicators released this week. The final estimate of Q1 GDP will be released on Thursday. First quarter GDP had initially been reported at a 1.1% growth rate but was revised upward to 1.3%.
The U.S. economy rests on solid footing following last week’s Fed meeting. Interest rates remained flat last week, and while the Fed may yet raise rates once or twice more this year, the end of the tightening cycle is clearly in view. Inflation continues to slow down, yet the consumer remains strong.