Large Bank Supervision Forum 2023

FEDERAL RESERVE Higher, but Slower? Nearing a Pause? Back to 50-75bp QT hikes? Rate cuts in 2023 – NOT!

LTC Vs. LLL Location-Timing-Capital won’t work under these interest rate conditions. Capital is “Locking UP” Refinance Risk is elevated. Property Owners and Borrowers with ReFi in 2023 and 2024 face “Maturity Defaults” with no Capital Options. Which TREPP description will apply for CRE ReFi in 2023? TREPP Description:

The Federal Open Market Committee’s (FOMC) tentative meeting schedule for 2023: • January 31-February 1 • March 21-22 • May 2-3

Note: No FOMC meetings in February nor April. It will take until May to really know FED reaction to Inflation and Rate Hikes.

• June 13-14 • July 25-26 • September 19-20 • October 31-November 1 • December 12-13 • January 30-31, 2024 https://www.federalreserve.gov/

13

INFLATION METRICS PPI/CPI/PCE/Flexible CPI: +18.5% Constr. Inflation in PPI & Food +10% in CPI SPR skewed Inflation; New “Super-Core” CPI ( Wages + Services + Shelter + Food)

Jan +0.7%

Jan +0.5%

Although the Producer Price Index declined 0.5 percent in December 2022, the Index for final demand increased 6.2 % in 2022 . Construction

Prices had the largest increase at 18.5%.

Producer prices for final demand increased 6.2 percent from December 2021 to December 2022 : The Economics Daily: U.S. Bureau of Labor Statistics (bls.gov)

14

CPI Home : U.S. Bureau of Labor Statistics (bls.gov)