THE LATEST ECONOMIC TRENDS IN CRE | June 2025

Source: MarketWatch, Trading Economics

Inflation Progresses Toward Fed Target Amid Tariff Uncertainty

Inflation has moved closer to the Federal Reserve’s 2% target, though tariff announcements have increased the risk of a short-term price rebound. In April, the Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge, rose 0.1% after showing no change in March. These two months marked the softest back-to-back inflation readings since the onset of the pandemic in 2020. On a year-over-year basis, the headline inflation rate eased to 2.1% from 2.3%, matching the lowest level recorded since that period. Excluding food and energy, the core PCE index rose 0.1% in March and April, reflecting continued cooling in underlying inflation. The annual core inflation rate slowed to 2.5% from 2.6%, its lowest reading since early 2021. For Columbus’ commercial real estate market, softening inflation is a welcome development. If inflation continues to cool and remains near the Fed’s target, interest rate stability, or even cuts, could follow, improving access to financing for investors and lowering borrowing costs for new developments. This would be particularly beneficial for sectors like industrial and multifamily, where construction and acquisition activity have slowed under the weight of higher interest rates. However, the potential rebound in prices due to new tariffs remains a risk that could stall or complicate this momentum.

Our Take

We view the recent inflation data as a cautiously optimistic signal for the Columbus CRE industry. Persistent progress toward the Fed’s 2% goal supports a more favorable lending environment and could reenergize deal flow that has been constrained by economic uncertainty. That said, tariff-driven inflation risks should not be ignored. Market players should monitor policy developments closely and remain conservative in underwriting deals. If inflation remains stable, Columbus is well positioned to capitalize on renewed investment activity and stronger fundamentals across key property types.