Unpacking the interest rate equation

The global equilibrium interest rate has risen from the extremely low levels (near zero) we saw between the Global Financial Crisis of 2008 and the Covid pandemic of 2020-22. Looking forward, rates could settle down in the 4.5-5.5% range, rather than 2.5-3.5%: not far from where we are now, and much higher than between 2008 and 2021, says BNY Mellon IM. Fundamental forces point to a higher real equilibrium rate than we have seen in the recent past and amongst these forces are higher productivity growth and the climate transition.