The Federal Reserve (the “Fed”) lowered interest rates by 0.5% due to the decline in inflation in the US. At The Family Office, we anticipate an additional 0.5% reduction by year-end and around 2% by the end of next year.
The Fed has set only two targets: to bring inflation down to 2% or lower and to have unemployment at 5%. Today, the unemployment rate is at 4.2%, which is well below the target and is considered a positive indicator. As for inflation, it is moving in the right direction toward the target level.
Amid declining interest rates, investors should focus on assets that yield between 6% and 8% over the next five years, such as CLOs and private debt. Attractive investment opportunities in real estate are also re-emerging for investors seeking revenue. As for investors seeking higher growth, with returns of 10% or more, attractive investment opportunities are currently available in private companies.
Watch the full interview above.