Federal Reserve Slashes Rates by 50 Basis Points
In September 2024, the Federal Reserve initiated its first rate cut since the pandemic, lowering the federal funds rate by 50 basis points to a range of 4.75%–5.00%, signaling a shift toward easing monetary policy amid progress on inflation and labor market concerns.
Originally Published in Connect CRE
Published on: September 17, 2024
The Federal Reserve’s Federal Open Market Committee on Wednesday slashed the federal funds rate by a half percentage-point to a range of 4.75% to 5.00%. The first interest rate cut since March 2020 represented a reversal in strategy for the central bank, which had held its key interest rate at a 23-year high for 14 months prior to Wednesday.
With inflation approaching the Fed’s target of 2%, policymakers are pivoting away from fighting inflation to the job market. However, the central bank anticipates only a half point in additional rate cuts for the rest of the year, indicating that the committee does not believe the job market is in imminent danger of collapsing.
“The (Fed) has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the Fed said in a statement. “The economic outlook is uncertain, and the Fed is attentive to the risks of both sides of its dual mandate.”
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Ari Rastegar, founder and CEO of Rastegar Property Company, concurred. “The Fed’s first rate cut in four years is a critical step for the commercial real estate market, which has been paralyzed for too long,” he said. “While it’s not a cure-all, it’s a powerful psychological signal that could break the market’s stagnation. Investors have been hesitant, holding back due to uncertainty, but today’s decision might finally shift that mindset. The hope is that we’re turning a corner, where deals can start moving again, helping to restart the real estate recovery and stabilize our broader economy.”
