The actions of the Federal Reserve this past week represent a clearly defined shift into a significantly more aggressive mode to improve the employment market. The Fed like all of us has been impatient to see employment numbers improve, and finally got tired of wai
Here are several bullet points that will give you the most important take away of these weeks’ events. I’ve underlined segments for emphasis.
- A couple of quotes from Bernanke’s news conference “We’re looking for ongoing, sustained improvement in the labor market. “There’s not a specific number we have in mind. What we’ve seen in the last six months isn’t it.” “We’re not going to rush to begin to tighten policy,” he said. “We’re going to give it some time to make sure that the economy is well established.”
- Unlike the first and second rounds of quantitative easing, today’s program has no end date, and Bernanke declined to provide specific estimates of what economic conditions would prompt the Fed to act or how long the purchases might last.
These first two points make it crystal clear that they are going to keep the juice flowing for an extended period of time. period
3. The FOMC also said it would probably hold the federal funds rate near zero “at least through mid-2015.”Since January, the Fed had said the rate was likely to stay low at least through late 2014. The Fed said “a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”
This policy ensures Commercial Bank lending rates remain low. If you are considering financing a purchase of commercial property you should be able to continue to find interest rates in the high 4 and low 5 per cent range. Factoring in inflation, you are virtually borrowing money for free!
- “Our mortgage-backed securities purchases ought to drive down mortgage rates and create more demand for homes and more refinancing,” Bernanke said.
If you haven’t refinanced, this is probably the time to do it, and this most likely helps keep the Multi-Family segment of the Commercial Real estate market steaming right along.