The Federal Reserve’s Open Market Committee vote on monetary policy last week was nearly unanimous, with eight out of ten members voting in the affirmative. The two dissenting members were Richard Fisher, president of the Federal Reserve Bank of Dallas, and Charles Plosser, president of the Federal Reserve Bank of Philadelphia, both of whom would like the Federal Reserve to raise interest rates sooner than currently projected. While interest rates continue to remain low, senior housing providers and investors seeking capital to refinance debt or purchase additional senior housing assets for their portfolios should contact Chicago-based Cambridge Realty Capital to learn more about the many different financing options it offers for these and other purposes.

Fed Officials Explain Their Committee Votes

Mr. Plosser, one of the more hawkish members on the Committee, dissented during the vote due to his disagreement with the Committee’s assessment that “it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the [quantitative easing] program ends.” Mr. Plosser believes the Committee is failing to account for the way in which the economy is progressing toward the Committee’s goals. He also criticized its assessment as too time dependent.

Mr. Fisher, another one of the hawks at the Fed, dissented during the vote due to a belief that the country’s slow but steady economic growth, labor market improvements, and the risk of asset bubbles forming in the financial markets necessitate raising interest rates sooner. Mr. Fisher likes to say that he is from the “slow and gradual school,” meaning he would like the Fed to raise interest rates in smaller increments. Mr. Fisher is particularly concerned about inflation and the potential for asset bubbles in the financial markets. He fears that keeping interest rates very low for an extended period of time will spur the growth of these bubbles and increase inflation. This will then force the Fed to raise interest rates to a level for which the market and economy are not ready, which in turn could throw the economy back into recession.

The 8-2 vote demonstrates that, while Mr. Fisher and Mr. Plosser are passionate in their views, they have a lot of work to do if they hope to change the minds of their colleagues. Time will tell if they are successful in this endeavor, but in the meantime, senior housing owners, operators, and investors who wish to take advantage of today’s low interest rates should continue to look to Cambridge Realty Capital for financing assistance.

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