In the latest edition of BGO's "The Chief Economist," Ryan Severino discusses the Federal Reserve's unexpected 50-basis-point rate cut, the first since 2020. The article delves into potential reasons for the large cut, such as inflation control, market influence, or a response to missed opportunities in July. Severino emphasizes the implications of the cut on the economy and commercial real estate (CRE), noting the positive impact on capital markets, transaction volume, and liquidity.
The forecasted fed funds rate provides further optimism, with predictions of lower interest rates supporting CRE demand and development. The article highlights the procyclical nature of the asset class, potentially benefiting from continued economic resilience.