The Federal Open Market Committee maintained the target range for the federal funds rate at 3.5% to 3.75% at the end of its January meeting today, after it made multiple cuts last year.
"The U.S. economy expanded at a solid pace last year and is coming into 2026 on a firm footing," Federal Reserve Chair Jerome Powell said in a news conference today. "While job gains have remained low, the unemployment rate has shown some signs of stabilization, and inflation remains somewhat elevated."
Powell commented that available indicators suggest that economic activity has been expanding at a solid pace. “Consumer spending has been resilient, and business fixed investment has continued to expand. In contrast, activity in the housing sector has remained weak,” he said.
The Fed’s action should have a muted short-term impact on the multifamily market, which depends on financing priced off Treasury yields, according to George Ratiu, the vice president of research at the National Apartment Association.
“The 10-year Treasury is hovering around 4.2%, about the same level as early September 2025, even with the volatility we saw in October and November,” Ratiu said.
Andrew Pilchick, managing director at commercial real estate services firm HKS Real Estate Advisors, said the Fed’s decision will primarily impact short-term rates, which should create a more favorable environment for bridge and construction financing.
“Lower short-term borrowing costs would help improve debt service coverage and overall deal feasibility, particularly for transitional multifamily assets,” Pilchick said in emailed comments.
However, the wildcard remains the long end of the yield curve. “If longer-term rates continue to rise, it could offset some of the benefits from short-term compression,” Pilchick said. “In that scenario, we may see improved execution on bridge opportunities while permanent financing remains more volatile.”
Threading a needle
The Federal Reserve has been walking a tightrope amid political pressure to cut interest rates, including a criminal probe against Fed Chair Jerome Powell, ABC News reported.
A mixed economic picture doesn’t make the decision any easier.
On one hand, gross domestic product figures, retail sales and equity markets seem to point to continued expansion, according to Ratiu. But, data on payroll employment, job openings, wage growth and consumer confidence show rising pessimism among Americans, he said.
“Compounding the mounting financial concern, inflation picked up the pace in the last eight months, with consumers experiencing higher monthly bills for food, cars, utilities, insurance, medical care and housing,” Ratiu told Multifamily Dive in emailed comments.
The Federal Reserve is keenly focused on bolstering the job market — as evidenced by three rate cuts last year, according to Ratiu. “Simultaneously, the central bank remains aware that its monetary easing actions risk further inflaming inflation,” he said.
At the National Multifamily Housing Conference in Las Vegas, most of the discussion is around supply in high-growth markets and when rents will stabilize rather than interest rates, according to Jamison Manwaring, co-founder and CEO of Neighborhood Ventures.
“We do expect interest rates to come down over the next year, but whether the Fed lowers rates this time or not really has a little impact on the multifamily housing market,” Manwaring said.
However, Powell noted in the press conference that no decision has been made about upcoming rate cuts and that there was “clear improvement in the outlook for growth.”
“The upside risks to inflation and the downside risks to employment have diminished,” Powell said. “But they still exist.”
Still, the committee will assess incoming data, the evolving outlook and the balance of risks, as it seeks to support maximum employment and return inflation to its target, 2% level.
“Monetary policy is not on a preset course, and we will make our decisions on a meeting-by-meeting basis,” Powell said.
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