Fed Chairman Sets Stage For Rate Cut In Senate Talk As Real Estate Prices Continually Rise

The RWR ETF went up yesterday.

It’s important because it is the biggest real estate REIT ETF.

Historically, real estate prices go down when interest rates go up to the point that they are restrictive on the economy, but this ETF has been going up for the past ten months.

Interest rates have not been high enough to make real estate prices decline, and yesterday Federal Reserve Chairman Jerome Powell gave his annual testimony about the state of the economy to the US Senate and set the stage for interest rate cuts, probably in September.

The average home in the US now costs $320,419, as measured by the Case Schiller US National Home Index.

The CPI inflation rate is still above 3% and when Powell began to raise interest rates, two years ago, he said that he thought interest rates would have to stay at a high level before the CPI rate would fall to the Fed’s 2% target, and promised to keep them high even if it risked recession in order to achieve that goal.

Now he shifted on Tuesday to worrying about “high” rates, telling the Senate yesterday that “reducing policy restraint too late or too little could unduly weaken economic activity and employment.”