The U.S. Federal Reserve has chosen to leave interest rates unchanged, reports Reuters. Concerned about a weak world economy, the U.S. central bank says they will wait to raise rates until later this year.
The Fed will meet again in October. Before hiking rates, the board members noted that they must see improvement in the labor market and feel confident that inflation will increase, according to the article. New economic projections show 13 of 17 policymakers still intend to raise rates at least once before the end of the year, lower than the 16 policymakers who foresaw hikes at the last meeting in June. The article reports that four policymakers think rates should not be raised until 2016, up from two who felt that way in June.
Teague Hunter, president of Hunter Hotel Advisors, says he expects a rate hike will cause short-term volatility in the hotel industry.
“Our institutional clients tell us they can absorb a one-point increase. A two- or three-point raise, though, would change the game,” he says. Whether the rate hike occurs today or within the next 18 months, an increase is somewhat inevitable. Hospitality investors have enjoyed a remarkable cycle of low interest rates with very impressive returns over the past few years. If a rate hike occurs, investors should be cognizant of the fact that rates will continue to be at historically low levels.”
To view the Board of Governors of the Federal Reserve System’s statement on the matter, click here.