Bank of America Corp.’s Jim DeMare warned of the knock-on effects of short-term Treasury yields at 5% and said higher interest rates are having a “dramatic change” on the biggest global industry trends.

“The returns to take risk, to draw you in to take risk, are increasing,” the Wall Street bank’s head of global markets said on a panel at the Future Investment Initiative summit in Riyadh on Wednesday. “That’s dangerous because that’s going to prevent capital from flowing to innovative industries, innovative companies.”

Specifically, DeMare said short-term Treasury yields at 5% force people “not to make decisions” as they’re comfortable with those levels of return. Given the level of health, wellness and renewable energy initiatives being pursued, a lot of innovation is needed, he added.

DeMare’s comments come as two-year Treasury yields trade above 5% and after yields on 10-year Treasuries exceeded 5% for the first time since 2007 earlier this week. They have since retreated to 4.9%. The Fed has signaled policymakers are likely to hold rates steady at their meeting next week, while leaving the door open to another increase in the future.

State Street Corp. Chief Executive Officer Ron O’Hanley on Tuesday said he expects the yield on 10-year US Treasuries to top out at 5% and that the spike was due to a combination of concerns over inflation and the rising cost of debt.

Earlier on Wednesday, Kristalina Georgieva, the managing director of the International Monetary Fund, reiterated the fund’s stance on interest rates, saying they had gone too high, too quickly.

“We have spent the last 20 years living frankly in terms of interest rates in fantasy lane,” she said. “It is actually going to normal to have interest rates that are in positive territory.”

(Updates with O’Hanley, IMF comments.)