What the numbers say: Over the past year, the Federal Reserve has brought its effective federal funds rate up from just over 0% to 4.75% - 5% to fight inflation.
Relevance: Since the global financial crisis that ended in 2009, many central banks have kept interest rates near 0%. Analysts including Nassim Nicholas Taleb have described the rise of cryptocurrencies and the success of the U.S. tech sector in the 2010s as a "zero interest rate phenomenon" (ZIRP).
Why Does It Matter? ZIRP refers to a historical period of low-interest rates, roughly between 2009 and 2022, that is unlikely to return anytime soon. Some analysts believe that under Jerome Powell, the Federal Reserve is unlikely to ease its monetary policy. This would negatively impact startups, which are highly dependent on new capital for growth.
What's Next? The Federal Reserve Open Market Committee, which makes monetary policy decisions, will meet on May 3. Futures markets see a 71% likelihood of the Fed raising interest rates by 25 basis points at the meeting.
