Raising Interest Rates: When Will the Federal Reserve Act?

Rate HikesIf you’ve been on the fence about selling or buying California wine country property, now is the time to act because the Federal Reserve is considering raising interest rates sooner than the market expects. That, according to an interesting article in Barron’s regarding possible rate hikes.

Given the Fed’s mandates to aim for maximum employment with moderate inflation, defined as 2% per annum, the level of U.S. equity prices should play little, if any, role in setting monetary policy. Surging stocks, plus strong jobs data could ease Yellen & Co.’s concerns and spur a rate hike sooner rather than later. Simply put, the Fed may raise interest rates sooner than the single hike the financial futures market foresees in 2017.

“On the positive side, our financial conditions index has now moved to its easiest level since July 2015,” says Goldman Sachs’ chief economist Jan Hatzius. “This is important because we estimate that the earlier tightening in financial conditions subtracted more than one percentage point from U.S. growth over the past year. The current FCI level suggests that this drag will give way to a slight positive impulse over the next year. So the economy is close to the mandate, financial conditions have eased, and the risks around our forecast of further above-trend growth look balanced. Given all this, why is the bond market priced for only a bit more than one rate hike over the next two years?” Hatzius asks.

We don’t yet know the answer to the question of when the Federal Reserve might be raising interest rates, but with the possibility of a rate hike happening in the near future, isn’t it time to consider buying or selling California Wine Country property? If so, give me a call at 707-953-9456 or send an email at nnaylor@interorealestate.com. I would be happy to share what I know about living and working as a country property specialist in Sonoma County. Want info on wine country properties in other surrounding towns? Please take a look at my comprehensive website. Looking forward to working with you!