Bloomberg Surveillance · Friday, July 31, 2026
Greg Daco highlighted that the cost of capital is expected to remain structurally higher due to persistent fiscal imbalances, a significant pull for private capital driven by AI investments, and volatile inflation. He noted that questions about central bank credibility, amplified by recent press conferences, also contribute to this trend.
“That's really one of the key points that I've been highlighting with a lot of the CFOs I talk to, which is this notion that the cost of capital is going to be structurally higher going forward, not because of what the fence next move is going to be, but because we have fiscal imbalances that are likely to be present for the foreseeable future.”
“Because we have a very large pull for private capital that's putting upward pressure on yields, including the big AI investment surge. Because we have inflation that is much more volatile in this environment of layered supply shocks, and because we have questions about central bank credibility and those were even more visible after the most recent press conference.”
“So those elements are likely to keep long term interest rates higher than they've historically been and be a constraint in terms of private sector investment, and.”