Members of the Federal Reserve Board have a very active end of summer, with a conference in Jackson Hole and then their upcoming Quarterly policy meeting September 16 and 17.
The majority on the Fed thinks the economy needs more time to heal and that a rate hike sooner than necessary would damage growth. John Williams of the Federal Reserve branch in San Francisco, which covers the Pacific Northwest was interviewed recently and says more time at these lower rates is the preferred strategy. There is a hawkish minority that thinks the Fed should act very soon to normalize monetary policy or risk higher inflation, but others have been very vocal they see the inflation risk as much less dangerous then allowing brakes to get put on the employment momentum.
One very interesting dynamic as we move into 2015, almost one third of the Fed board positions will change over which could certainly impact the policy direction.
What will be the impact on commercial real estate activity? For now we recommend as we have for the past four years. Rates are stable, and remain at historic lows. If you have borrowing needs, consider this as a good time to get with your banker. If you are ready to move from leasing to owning and want to use an SBA 504 loan, rates are still in the low 5 % range this month, but those loans often fund 6 to 9 months after you purchase a building. Move into action now.
