KKR & Co. (NYSE:KKR) is betting that elevated interest rates are becoming the new normal.
The New York-based firm raised its outlook for longer-dated U.S. Treasury yields and now expects the Federal Reserve to keep interest rates elevated for longer, citing Chairman Kevin Warsh’s concerns about inflation that has yet to fully ease.
The private equity firm now projects the 10-year Treasury yield will end the year at 5.1%, up from its previous estimate of 5%. For the end of 2027, the firm lifted its forecast to 4.9% from 4.7%, according to Bloomberg.
KKR also expects the Fed to raise rates again in December, followed by another hike in March.
KKR said the Federal Reserve’s latest outlook suggests that inflation may not return to its 2% target until 2029. The firm said the combination of still-elevated inflation, solid nominal economic growth, and interest rates that remain somewhat elevated supports keeping monetary policy tighter for an extended period.
Photo: Shutterstock
Login to comment