This month, our focus continues to be on the uncertainty in international markets and clarity in the domestic capital markets.

Contradicting data points indicate that while the employment rate improves and gas prices stay low, the American consumer is continuing to be frugal, as indicated by weak retail sales. However, monetary policy abroad continues to dominate headlines, while the effects of these policies have yet to be fully determined.

The statement from the Fed this Wednesday lowered expectations for rate increases this year to 0.9% for the Federal Funds rate at year end, while also raising concerns regarding inflation. The Fed also cut expectations for GDP growth which led them to target just two rate increases this year, a significant reduction from the four rate increases projected in the December meeting. Fed officials justified slashing expectations by citing “global economic and financial developments [that] continue to pose risks“. Although these comments were a stark contrast to the December meeting, the market was anticipating more conservative action by the Fed and thus the Federal Funds Market was largely unchanged.

Ultimately, we feel this Fed statement, while more tempered than the aggressive expectations presented in December, was indicative of encouraging economic conditions domestically. The implications of this meeting will be significant for capital markets, as stability in rates can be all but assured for 2016. In our view, a combination of factors, such as a record $2.38 trillion multifamily debt outstanding (according to the Mortgage Bankers Association), a clear path for interest rates, and the relative safety of the NYC real estate market, allow us to continue to be optimistic about financing environment for the foreseeable future.