The cost of capital

At ECP, one of our core convictions is the return to a normalised interest rate environment. This chart — spanning 5,000 years — reminds us that near-zero rates between the Global Financial Crisis and the exit of the Covid pandemic were the exception, not the rule.

That period was marked by unprecedented central bank liquidity to rescue growth. With inflation back, even if benign, central banks have had no choice but to restore a price to money.

A functioning capitalist system depends on the cost of capital. When money has a price, value matters again. That’s where our investment approach thrives — assessing earning power, valuing businesses realistically, and focusing on long-term fundamentals.