If it’s not one thing, it’s another.

Like the rest of the world, senior housing/healthcare borrowers watched with interest as the Fed’s Open Market Committee (FOMC) cited an unanticipated downturn in job growth numbers as the main reason why the interest rate banks charge each other for overnight loans – the Fed Fund rate – would remain unchanged until further notice.

The Fed Fund rate is the heaviest weapon in the central bank’s inflation-fighting arsenal.  For weeks, the Fed had been expected to consider raising the rate at its June meeting – for the first time since it was upped a quarter of a percentage point last December.

“Many of the experts had been anticipating at least two rate hikes in 2016.  Then the government revealed that employers added just 38,000 jobs in May – the weakest gain in five years,” said funding expert Jeffrey A. Davis.

“That’s much lower than the 150,000 jobs the economy needs to keep growing,” he points out.

Mr. Davis is Chairman of Cambridge Realty Capital Companies, one of the nation’s leading senior-housing/healthcare lenders, with more than $4.6 billion in closed transactions.  He says Fed officials continue to stress that interest rate policies are not on a pre-set course but rather are “data dependent.”

At a recent press conference, Fed Chair Janet Yellen said that while the U.S. economy looks fundamentally solid, there were too many uncertainties to give a specific timetable for upcoming hikes. Particularly worrisome is the fact that the current rate of inflation (about 1 percent) is only half the 2 percent target rate the Fed believes to be most desirable for sustaining economic growth.

“Historically, an expanding economy has resulted in rising inflationary pressures, only not this time around.  To this point deflation – not inflation – appears to be the bigger concern for monetary policy makers.

“What this suggests is the possibility that borrowing costs might remain at today’s attractive level for a longer period of time than expected,” Mr. Davis said.

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