The economy has undergone a structural transformation that ended the low-cost era. ‘The regime change in inflation and interest rates is the outcome’

President Donald Trump has renewed his attacks on the Federal Reserve after it hiked its benchmark interest rate Wednesday, but the Fed matters less than broader economic trends when it comes to longer-term borrowing costs, economists say.

The economy is growing steadily despite being hit with repeated shocks — and may even be accelerating — while inflation remains stubbornly high. And big tech firms are borrowing huge amounts of cash to plow into data center construction while the federal government is still running large yearly budget deficits. All these trends point to higher interest rates regardless of what the Fed does, analysts say.

As a result, the low interest-rate, low-inflation world that lasted for nearly 15 years after the Great Recession is over and a higher-priced, higher-rate world is taking its place. Mortgage rates fell into the 3% range in the 2010s and even lower during COVID-19, but such deals are long gone. The average 30-year mortgage rate reached 6.95% last week, the highest in more than a year and a half.

Joe Brusuelas, chief economist at RSM, a tax consulting firm, said that a big reason for the change is a shift from the pre-pandemic economy in which consumer and business demand was weak, to the........

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