Industry Experts Weigh In on the Fed’s Policies for 2026
Is a more aggressive policy in the cards?
The Federal Open Market Committee has remained vigilant in keeping with its dual mandate of bringing inflation to 2 percent while supporting a strong labor market. This data-driven, “wait-and-see” attitude is shaping expectations across the multifamily market, particularly for investors and developers heading into 2026.
Most industry experts predict the Fed will stay put on interest rates at tomorrow’s meeting, even as the Trump administration implicitly and explicitly mounts pressure on the central bank to pursue a more aggressive monetary policy. In August, President Donald Trump attempted to remove Federal Reserve Board of Governors member Lisa Cook from her post, and the Department of Justice launched a criminal investigation into Chairman Jerome Powell.
Barring any serious disruptions to the Fed’s independence, the approach this year will be more of the same, even as Powell’s term ends in May.
Crystal balls
Michael Fratantoni, chief economist and senior vice president of research and business development at the Mortgage Bankers Association, expects one rate cut in the middle of 2026, noting that a softening labor market tempers housing demand, which would put both sides of the mandate in better balance with each other.
Some anticipate a more aggressive Fed, barring any serious economic disruptions. Tyler Mangin, senior economist at CBRE Econometric Advisors, signals that shelter inflation is one of the key indicators the Fed is watching, and the expectation is that this component will pull inflation down throughout the year. Additionally, multifamily fundamentals such as asking rent growth are low while concessions are high, making the Fed more likely to cut rates this year. Mangin said conditions could support one to two rate cuts, potentially as early as April or June.
“Additional rate cuts could be beneficial for investors utilizing short-term borrowings,” Fratantoni told Multi-Housing News. “However, cuts that stoke fears of another pickup in inflation could steepen the yield curve, perhaps even increasing longer-term rates that are typically more important in real estate finance,” Fratantoni said. “If the Fed cuts in response to signs of a more rapid weakening in the job market, we expect that longer-term rates would drop as well.”
How developers are faring
With a cooling labor market and a higher interest rate environment, underwriting deals remains challenging for developers. Mark Stewart, chief investment officer at Bainbridge Cos., said that investors cannot model outsized rent growth as investment committees demand more conservative assumptions, making it harder to underwrite new multifamily construction and transactions.
Ryan Reich, founder & CIO at Mountain Shore Properties emphasized how selective the Mountain Shore is around new projects, especially as these developments are still years out from completion. Mountain Shore even sells land when a project isn’t feasible.
“Development’s difficult—there’s all (sorts of) different challenges and risks involved,” Reich said. “You need a certain amount of cushion, and whether it’s costs going up, rents staying flat or rates going up, it’s difficult to justify that risk.”
There are still areas where fundamentals are strong and make sense for new construction. Reich said that Charleston, S.C. is performing well, and the company is looking to recapitalize its debt in the area. Ian Glaser, a partner at BridgeInvest, pointed out that areas within the Northeast, as well as major metros in Florida, Texas and Georgia are seeing an uptick in development, particularly in adaptive reuse and value-add projects.
Even though there are some areas that support new construction, broader market conditions continue to keep development constrained. Joe Biasi, head of commercial capital markets research at Newmark, explained that a lower federal funds rate is beneficial for value-add projects and construction funded with shorter-term loans. At the same time, longer-term yields matter more, even though they haven’t moved much. Biasi told MHN that while the Fed cut rates by 75 basis points in 2025 starting in September, the 10-year Treasury yield declined just 10 basis points over the same period.
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“The longer it takes for rates to fall, the more resistance there is to additional construction,” Biasi said. “Given that the expectation of improving fundamentals is driving acquisition volume in the space, it follows that some short-term ‘pain’ might yield some long-term gain for investors.”
Bridging the financing gap
While the market is showing signs of improving, Reich pointed to banks slowly making their way back into the capital stack. Stability after the Fed’s cuts last year has improved financing options in the multifamily sector, and where three years ago maybe one bank would participate, several more are expressing interest today.
“I think you’re going to see more people going back to traditional lenders and maybe a little less reliance on private credit,” Reich said. “But one of the biggest impediments to bringing supply online is still access to capital—and I don’t mean cheap capital,” Reich noted. “It’s the credit spreads banks continue to apply to some of these assets.”
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Still, a return of traditional capital does not supplant the need for private, alternative and bridge financing in real estate. Glaser highlighted that these short-term bridge loans ticked up over the last two years, providing financing solutions when banks were unable to do so. Throughout 2026, Glaser anticipates this trend to continue through a monetary easing cycle, especially with anticipated Fed cuts later in the year.
“We expect about $3 trillion in loans to come due in the next five years,” he said. “This is going to require lenders to adjust capitalization structures, so there’s a huge demand for new financing of these assets.”
Banks are deploying capital selectively in markets with strong fundamentals and high asset quality, Charles Krawitz, chief capital markets officer at Alliant Credit Union, told MHN. “If the cuts do not materialize or rates move meaningfully upward due to robust GDP results or surprise inflationary figures, rest assured that banks and others will quickly hit the brakes on their designs,” he said.
