The Consumer Price Index rose 0.2 percent in June, less than expected, which in part reflects a reduction in energy prices, which had spiked last year due to the Ukraine war. CPI is up only 3.0 percent over the past 12 months, indicating a moderating pace of inflation, though core CPI remains up 4.8 percent year-over-year.
CBRE expects inflation will continue to moderate but remain above the Federal Reserve’s 2 percent target for the rest of 2023. Even though inflation is easing, CBRE expects that the Federal Open Market Committee will increase the federal funds rate by another 25 basis points this month to a range of 5.25 percent to 5.5 percent to keep downward pressure on prices.
CBRE then expects that the Fed will hold rates at that level through 2023, resulting in a moderate recession later this year. As result, the firm does not anticipate that capital markets activity in the commercial real estate sector will improve until first half 2024, followed by improved