On Wednesday, the U.S. Central Bank pushed interest rates up by 0.75 percentage points, raising the central bank’s benchmark overnight interest rate to a range of 3.00%-3.25%. While many deny the economy is in a recession, it can not be denied that we are in the midst of the largest inflation wave since the 1980s and unemployment has reached a level historically associated with recessions.
Jerome Powell, the Federal Reserve Chair, insisted that the Federal Reserve, which supervises and regulates the nation’s banks, will persist in their efforts to tamper down inflation, even if it means making everything more expensive. “We have got to get inflation behind us,” Powell told reporters. “I wish there were a painless way to do that. There isn’t.”
Generally, higher interest rates can have a positive impact on real estate revenue growth, but the rapid rate at which interest rates kept going up this year is enough to give investors pause. Even though interest rates are on the rise, which affects what investors can afford, they will be concentrating on raising rents to maintain high valuations. The Fed has made it plain that if inflation is high, which it will most likely continue to be, rates will continue to rise until it is brought under control.