This secular decline has meaningfully impacted global interest rates, and driven them to record low levels (including negative levels) across some of the world’s largest economies. With the onset of the Covid-19 Pandemic, and the subsequent historical market reactions to it, these concerns have been dramatically heightened.
On top of these issues, the policy responses enacted so far — namely, the record stimulus provided by monetary and fiscal authorities — have caused many in the institutional investment community to contemplate what a sustainable future might look like should these efforts fail to meaningfully lift economic growth prospects. To address the heightened concerns over the impact that secular low interest rates might have on expected rates of return, actuarial interest rate assumptions, funding levels, etc., Meketa established a Low Interest Rate working group to identify: