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WASHINGTON (AP) — 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.
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So growth would be low and slow. “Well, times sure have changed,” he continued. “Ever-expanding pools of capital are pouring into AI-related infrastructure of all sorts.” The additional spending and investment has contributed to higher longer-term interest rates on government bonds that are competing for lenders.
