National + Finance | February 21, 2023

Fannie Mae Sees Fed Pursuing “Higher for Longer” Interest Rate Policy

The recent “blowout” labor report and unexpected robustness in retail sales and manufacturing output don’t mean a reduced likelihood of recession, the Fannie Mae Economic and Strategic Research Group said Tuesday. The group continues to expect the economy to fall into a modest recession and now believes the likely start date will be in the second quarter of 2023.

Far from encouraging the Federal Reserve to ease up on its tight monetary policy, recent data releases raise the possibility of the Fed both pushing its federal funds rate target higher than currently expected and keeping it there for longer to meaningfully slow economic momentum and inflation, posing larger and longer-term risks to the economy and financial stability.

“Recent data have been stronger than expected in ways that we believe are likely to lead to tighter monetary policy with attendant increases in interest rates,” said Doug Duncan, Fannie Mae’s chief economist.

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Fannie Mae's ESR Group

About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).