Fed’s Ability to Tweak and Fine Tune Interest Rates is being Tested

Crosstown Commercial Team  /   May 7, 2018

Fed’s Ability to Tweak and Fine Tune Interest Rates is being Tested

The Federal Reserve recently adjusted how it sets short term interest rates in an effort to keep them from naturally floating higher, but an increase in its benchmark rate raises many questions about its ability to keep borrower costs under control.

The Fed’s benchmark federal-funds-rate, sitting between the target range of 1.75% to 2% continues to creep closer to the ceiling although recent tweaking efforts were designed to keep rates closer to the mid tier percentages – smack dab in the middle of that range appears to be the goal.  With the benchmark sitting at 1.92%, The Fed would be more comfortable with rates hovering closer to 1.875%.  Past history and the central banks recent moves show that Fed officials are still fine tuning their rate setting strategy post financial crisis after that period significantly altered how monetary policy was being implemented.

If anyone can guess where the policy maneuvers end up, that would be some stellar forecasting!  The Little-Starr Team at Crosstown Commercial Real Estate guesses players who are participating in month end dips with effective federal funds rates -where the players may be taking their foot off the gas to make it look like borrowing decreases during regulatory reporting periods- could have something to do with it.  We don’t know, were are just stellar commercial realtors working hard for their clients everyday despite all of the Fed minutia decision making going on.  Monetary policy is hopefully what they can figure out, commercial real estate is what we do best and we’ll stick to focusing on where we spend our efforts. 

Call the Little-Starr team of Tim Little and Jim Starr, your trusted Crosstown Commercial Real Estate agents, for a discussion on how this might affect your future business planning.  952-432-4900.