Source: NAIOP

After lowering interest rates several times last year, an action that ended an inverted yield curve scenario, the Federal Reserve has held the line thus far in 2025, much to the chagrin of the commercial real estate community.

That stance might be changing at next month’s Federal Open Market Committee’s policy meeting, driven by prolonged economic uncertainty, the weakening national labor market, and intense influence from the current administration.

Several area banking and capital markets professionals weighed in with their predictions of an interest rate cut and its projected impact on investment sales activity.

“Predicting interest rates has not been something we have focused on and, frankly, most who have tried have not been very accurate,” Kevin J. Tehan said. “The momentum does seem to be shifting toward lower rates, assuming future employment and inflation data give Federal Reserve Chairman Powell room to cut. While we do some floating-rate, SOFR-based lending, we are more closely tied to the 5-, 7-, and 10-year Treasuries for long-term, fixed-rate financing, which are primarily influenced by market forces. Because of that, we have already seen a bit of a rate drop over the past 60 days, driven by recent jobs and inflation reports.”

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