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'We May Be At The Turning Point' For Rate Hikes, Inflation

February 08, 2023

Investors looking for a bit of respite from inflationary pressures may find solace in Fed Chairman Jerome Powell’s recent remarks following the central bank’s February meeting.

At a press conference in the wake of that meeting, at which the Fed announced a 25 bps increase of the overnight rate, Powell said the “disinflationary process has started” — and that means the Fed will be under less pressure going forward to increase interest rates, according to Marcus & Millichap’s John Chang.

Also important? Powell said he continues to think there’s a path to get inflation below 2% without a significant economic decline or increase in unemployment.

“In August, September, November and even December, Powell was saying things like there will be pain, and that unemployment would need to go up to 4.4% or 4.6% to get inflation under control. the shift in tone suggests the Fe no longer thinks they need to cause a recession to get inflation down.

The third statement that caught Chang’s attention was Powell’s acknowledgement that while there would likely be ongoing rate increases, the central bank would revise its outlook at its March meeting. Chang calls the remark a “significant step away” from where we were a few months ago, and a positive indicator for the CRE markets.

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