**Peter Linneman Predicts 75–100 Basis Points of Rate Cuts Before End of 2026 on Walker Webcast**
Peter Linneman, founding principal of Linneman Associates, made his 24th quarterly appearance on the Jan. 28 episode of the Walker Webcast, hosted by Walker & Dunlop CEO Willy Walker. The conversation took place just ahead of the Federal Reserve’s January Federal Open Market Committee (FOMC) meeting. Linneman accurately forecasted that the Fed would keep the federal funds rate at its current level, aligning with broader market expectations.
Looking ahead, Linneman anticipates the Fed will introduce multiple rate cuts before the end of 2026—although not all at once.
“I would not be surprised at all if this year we get 75 to 100 basis points of cuts,” he said. He cited the potential for former President Trump to appoint officials, including a new Fed chair, who could push for a more dovish monetary policy. According to Linneman, inflation, excluding shelter costs, is currently at 2.1%, a level it has hovered around for the past three decades, pandemic years aside.
While recent FOMC meetings have seen increasing dissent among officials after years of unanimous votes, Linneman views this divergence as a positive sign. “I view dissent as healthy,” he told Walker. “But I don’t think a new chairman walks in and says, ‘Okay, let’s do 75 basis points in a month.’ Culturally, they’re not going to do that. They’re going to bleed out those rates over six months, seven months, eight months.”
Speaking live from IREI’s VIP Americas Conference, Walker observed that despite strong macroeconomic indicators—such as a robust stock market and low unemployment—the commercial real estate sector continues to face challenges.
“You’ve got office values down by 30% from pre-pandemic,” Walker said. “Multifamily values are also down 30%, retail shopping centers down 20%, and hospitality is roughly the same.”
This has raised the question of when the broader economic strength will translate into rent and value growth for struggling asset classes. “It feels like we’re in no man’s land right now,” Walker added.
Linneman offered a cautiously optimistic outlook, suggesting demand remains strong in multifamily and is starting to recover in the office sector. The real issue, he said, is oversupply. “What has been the problem is too much supply,” Linneman noted. He explained that oversupply typically occurs in spurts and takes time to work through the system. As a result, he remains bullish on office and retail due to new construction falling well below trend levels in those sectors.
On the topic of artificial intelligence, Linneman challenged the notion that AI is eliminating jobs on a net basis. “We are not adding jobs, but we’re not losing jobs,” he said. However, he warned of potential oversupply in AI-related infrastructure down the road. In the near term, though, he remained upbeat.
“If you’re in the AI-related service provision, including data centers, you can’t lose for the next two or three years,” he asserted. “Why? Because so much money has already been committed that just getting that through the system is creating huge margins for everything related to it.”
The hour-long conversation also delved into housing affordability, the broader macroeconomic outlook, and Linneman’s ongoing use of his “canaries in a coal mine” system—a framework designed to gauge the severity of headwinds facing commercial real estate.
On-demand replays of the Jan. 28 Walker Webcast are available on the Walker Webcast channels via YouTube, Spotify, and Apple Podcasts.
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