Economic Overview:

• The Federal Reserve kept interest rates at the current target range of 4.25% to 4.50% at the conclusion of its January meeting, but policymakers warned that inflation remains “somewhat elevated.” The pause comes after the central bank cut rates three consecutive times to end 2024.

• At his press conference, Federal Reserve Chair Jerome Powell emphasized that the central bank is in no hurry to adjust its policy stance, particularly as the economy remains strong.

• Fed Chair Powell reiterated the central bank’s commitment to achieving a 2% inflation rate.  When discussing the Federal Open Market Committee’s plans to conduct a new review on its monetary policy framework this year, Powell said its inflation target is not subject to change.  “The committee’s 2% inflation goal will be retained and will not be a focus of the review,” Powell told reporters Wednesday.

• According to CoStar, consumers turned testy this month . Despite maintaining healthy spending habits last year, consumers are decidedly gloomy at the start of the new year, according to the latest survey by The Conference Board. The results likely highlighted consumer pessimism about the labor market, with hiring prospects weakening.

Commercial Real Estate Market Overview:

• According to JLL, Institutional Capital is returning, they are seeing institutional capital become more active in major markets, especially for larger transactions. Over the past six months, some 43% of U.S. transactions over $100 million were awarded to institutional buyers, up from 27% in 2023.

• The U.S. economy remains robust. It’s time to retire the recession predictions; the economic fundamentals remain strong going into 2025. This is according to Cushman and Wakefield. 

• Also according to JLL, It’s increasingly clear that 2025 will be a year of both growth and complexity. We see investors return to the fold as real estate lending and transactional markets further improve – and crucially, for the office sector, as more companies seek additional space.