About the report

In 2024, key central banks, including the US Federal Reserve and the European Central Bank, initiated interest rate cuts. This marks a significant shift, as lower rates typically stimulate increased borrowing and lending, driving more activity in financial markets and supporting overall economic growth. The resulting boost in liquidity can serve as a catalyst for GDP expansion.

Taking a medium-term perspective we believe that this monetary easing will also have significant, positive implications for private assets. This report outlines why the path to lower rates is a welcome stimulus.

‍Key takeaways

• Central banks are shifting toward looser monetary policies, which is expected to positively impact private equity dealmaking and portfolio management.

• Lower interest rates typically lead to cheaper leverage, improved cash flows for portfolio companies, higher valuations and improved exit opportunities.

• While the full effect of lower rates on private equity might take some time to materialise, the positive psychological impact on markets should not be underestimated.

Important notice: This content is for informational purposes only. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Don’t invest unless you’re prepared to lose all the money you invest. Private equity is a high-risk investment and you are unlikely to be protected if something goes wrong. Subject to eligibility. Please see https://www.moonfare.com/disclaimers.