In widely expected move, Fed increases rates by 0.25%

The Federal Open Market Committee raised the target federal funds rate by 25 basis points to a range of 5.25 percent to 5.5 percent at its meeting July 26. While expected, this is the highest target federal funds rate in 22 years and will have wide-ranging effects across the economy and commercial real estate.

In a statement, the Fed noted, “Recent indicators suggest that economic activity has been expanding at a moderate pace,” pointing to “robust” job gains and low unemployment, while inflation has remained “elevated.” The U.S. banking system was characterized as “sound and resilient.”

This is the 11th increase in the target federal funds rate since the Fed began raising rates in March 2022 and follows a pause in June. Looking ahead, this may be the last increase in the target federal funds rate this year. In a research brief released after the FOMC meeting, CBRE