With the Federal Reserve raising interest rates, real estate mogul Sam Zell has been spending some of his time out of the office visiting financial news outlets, opining on what the central bank should do next.
On June 15, hours before the Fed raised its target lending rate by 75 basis points, or three-quarters of a percentage point, Zell went on CNBC's "Squawk Box" to urge the central bank to increase the rate by a full percentage point.
He made a similar comment on Fox Business in early May, warning that the economy would face serious problems if the Fed weren't as aggressive as Zell recommended. "We have overstimulated the economy by a big factor," Zell said last week on CNBC.
"We have to take the punch bowl away, and we also have to recognize the fact that when you’re raising by a point when you’re starting at one and a half and going to two and a half, or something like that, that’s really not that much."
As for his day job as founder and chairman of Chicago-based Equity Group Investments, Zell said the higher cost of financing would kill some real estate transactions and push back others.
"Right now the focus is on what’s going to happen in the future, and I think that’s materially impacting the confidence of people to go forward," he said. "So I would envision at least for the near term, and the near term is for the next six months, I would think that real estate transactions will be lower, and the deals that get done will get done because of conviction and people will defer and say, 'I can wait till next year.'"
If it's any consolation to Zell, the Fed's chairman, Jerome Powell, said a similar rate hike of 75 basis points could be considered at the committee’s July meeting.