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SF Fed on Monetary Policy's Slow Impact on Rent Inflation

US
  • SF Fed research (here) notes evidence suggests that, as monetary policy tightening cools housing markets, it can also reduce rent inflation, although this tends to adjust relatively slowly.
  • A policy tightening equivalent to a 1 percentage point increase in the federal funds rate could reduce rent inflation as much as 3.2 percentage points over 2½ years.
  • That translates to headline PCE declining by about 0.5pps over that period.


Source: SF Fed

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