The Real Deal New York

Fed’s rate indecision persists as meeting looms

Hawks and doves still battling over board's next move

August 20, 2015 10:44AM

From left: Janet Yellen and Richard Fisher

Federal Reserve watchers and real estate investors have spent years waiting for the central bank to raise interest rates from their current near-zero level, but conflicting indicators and Fed officials’ disagreements are making it hard to predict the board’s next move.

The Fed has signaled for months that it plans to raise rates this year, but as its mid-September meeting approaches, newly-released minutes suggest suggest economic uncertainty — a still-weak labor market, slowly-rising prices, global oil prices, poor performance in China — is muddling the picture.

A rate rise would have far-reaching implications for real estate, affecting nearly all long- and medium-term budget forecasts and investment decisions. The Fed has held rates near zero for years, attempting to provide a monetary stimulus to the economy in the wake of the 2008 financial crisis.

But economic recovery in U.S. has come only gradually, and Fed officials are at odds about the shape of the overall situation. Inflation hawks like retired Dallas Fed president Richard Fisher say the Fed’s credibility depends on making a move, according to the Wall Street Journal. But doves like Chairwoman Janet Yellen have long insisted that a hasty decision to move on rates could have a negative impact on the still-somewhat-fragile recovery. [WSJ]Ariel Stulberg