The FED is likely to keep the interest rate below 1% through 2020

The Fed has kept interest rates very low over the last 7 years. In this time period interest rates have not been higher than 0.18%. Private equity giant KKR believes nothing is changing any time soon, in fact they say that it will be multiple years before we see interest rates higher than 1%. Henry H. McVey, KKR's head of global macro and asset allocation reports that: "Not surprisingly, given all these types of remarks as well as sluggish growth, the fed funds rate is now below 1% and we think it could trend below 1% until at least 2020."

This contradicts statements that the Federal Open Market Committee have made. The Federal Open Market Committee estimated in June that the policy rate would be 2.4% in 2018, growing to 3% in the long run. Based on these values, it becomes increasingly difficult to achieve expected returns from the 60/40 equity/bond strategy that so many financial institutions use. Pension funds and domestic stocks will also struggle to meet expected return. Investors will need to look elsewhere. KKR recommends a five-pronged approach "yield and growth; avoiding investments tied to Chinese growth and focusing instead on its exports; focusing on large U.S. domestically focused companies; providing liquidity to nonbank lending operations; and increasing exposure to complex stories, including earnings misses, restructurings, and/or corporate repositionings."

http://www.cnbc.com/2016/09/08/private-equity-giant-kkr-says-the-fed-to-keep-funds-rate-below-1-percent-through-at-least-2020.html