In a meeting late today the Federal Open Market Committee made an unprecedented move to hold the range for the federal funds rate of 0 to 1/4 percent “at least through mid-2013. Citing ‘considerably slower’ economic growth than expected.
From the standpoint of commercial real estate investors this news holds some hope to increased liquidity to bolster relatively slow market movement along with the promise of a 2-year financing window. The questions is, with unemployment remaining high what will the market for real estate be? A silver lining may lie in the increase in investment in equipment and software which may help bolster the struggling industrial sectors.
Also, an interesting footnote in the report cites the lack of unanimous agreement of the FMOC on this action. The committee passed the action in a split decision 7 to 3 with the dissenting faction which would have ‘preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for an extended period.
While receiving quite a bit of domestic scrutiny, this specific set of financial leadership is worth watching as their last major act, the TARP bailout, is on track to deliver $40 Billion in profit, to be handed over the the US treasury. To date, this is the largest return on any Federal Reserve intervention to date.
The full official FOMC release can be found here: