How Fed Rate Cuts will Impact the U.S. Economy

How Fed Rate Cuts Will Impact the U.S. Economy in 2024

The U.S. Federal Reserve has announced the first interest rate cuts in four years. These long-anticipated rate reductions are likely to have a significant impact on investors in private assets, dividend recapitalization transactions and the M&A market.

Kroll offers an array of cross-service expertise that helps clients navigate the impact of interest rate cuts. Our Transaction Opinions, Valuation ServicesM&A and Transaction Advisory Services experts have provided thoughtful guidance on how to successfully respond to the Fed's ongoing rate cut activity. Please contact us with any questions.

The fed fund rate reduction will impact various interest rates, and as a result, is likely to have a significant impact on investors in private assets, dividend recapitalization transactions and the M&A market:
 

Dividend Recapitalization Transactions

The combination of lower rates, a buoyant leveraged loan market and the usual year-end rush to enhance private equity returns is likely to accelerate dividend recap activity in the fourth quarter.

The Rate Decrease Impact on the M&A Market

In the M&A markets, interest rate cuts combined with increasing demand for private investments provides a perfect storm for increased deal activity.

Impact of Reduced Cost of Borrowing

Lower interest rates reduce the cost of borrowing, making dividend recapitalizations more feasible and more attractive.

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