Federal Open Market Committee September 17-18 Meeting

Americans are tuning in this month to the Federal Reserve after Chairman Jerome Powell spoke at the Jackson Hole Economic Symposium on 22 August 2024 about lowering interest rates.

https://www.federalreserve.gov

2020 is the last time Americans faced a cycle of rate cuts.

The major question now:

What should we expect?

Bloomberg News Anchor David Westin investigates RXR Reality CEO Scott Rechler -- specifically regarding the Commercial Real Estate sector.

RXR Realty is a vertically integrated real estate and infrastructure owner, investor, operator, and developer founded by Rechler in 2007 -- headquartered in New York City.

Rechler began the interview with historical context - 2023 is the first time since 2007 the federal fund rate reached above 5%. Between the 2008 Great Recession and 2020 Covid Pandemic, federal fund rate stayed near or below 2%.

It is necassary to recalibrate capital structures and values to figure out a new normal leading into the next decade. Rechler expects a practical rate of 3 or 4%.

"Not like 2008, more like the early 1990s"

- Rechler

From a commercial real estate point of view, Rechler anticipates a "multi-year process" similar to the 1990s when loans could either restructure, recapitalize, or mature in waves.

Currently bank regulators are pressured to reduce commercial real estate exposer. Non-bank lenders, such as private equity shops, are trending.