Jesper Rangvid, professor of finance at Copenhagen Business School, explores what leaders should understand about interest rates, inflation, the cost of capital, prioritization, and AI.
Rangvid explains why the roughly 40-year decline in interest rates was "a completely unique historical period" and why executives should not assume borrowing will continue to get cheaper. Falling inflation and demographic changes helped drive rates lower, while low rates also contributed to rising house prices and increased borrowing. As he puts it, "lower and lower interest rates are not always good."
He discusses the post-pandemic shift toward higher inflation and interest rates, including the growing financing needs of governments and major AI companies. For executives, the key question is how changing financing costs affect investment and strategic decisions.
The conversation also explores prioritization and reflection. Rangvid describes scaling back his media commitments because "it simply takes too much time" and using running as "a time of reflection" to think through difficult problems from different angles.
Finally, Rangvid shares a cautiously optimistic perspective on AI and argues that technology does not eliminate the value of human judgment. Even when AI can produce an answer in seconds, "facilitating a discussion among executives is still unbelievably useful" because different perspectives help people challenge assumptions and think more deeply.
Get Jesper's new book, How Low Interest Rates Change the World, here: https://tinyurl.com/fbjzvwkz
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