“Households were shrinking their balance sheets relative to their incomes, and that’s a very important disinflationary force that’s not present now,” said Julia Coronado, president of MacroPolicy Perspectives and a former Fed economist.

Today, most households have less debt and higher income families in particular benefit from strong gains in home values and the wealth of the stock market. Around 40% of houses are now freehold and clear, with no mortgage. Greater wealth can spur continued spending on travel, electronics and eating out.

In addition, high-tech companies are increasing their investment in data centers to accelerate their work in artificial intelligence. trump announced on Tuesday a joint venture between OpenAI, Oracle and Japan’s Softbank to invest $500 billion in data centers and electricity generation to fuel AI research. Before the pandemic, many companies were hoarding cash and not investing as much, which can keep interest rates lower.

“We’re in a different world,” said Joe Brusuelas, chief economist at RSM, a tax advisory and consulting firm. “Gone is the era of low inflation and low interest rates. In its place is a new framework of tight capital and higher rates.”

As a result, Trump’s promises to stimulate the economy through tax cuts and deregulation, while promising to impose tariffs and immigration restrictions, could keep prices high.

“That will be inflationary, and that will push (Fed) policymakers to adopt tighter policies than they would otherwise,” said Gregory Daco, chief economist at EY. “So you’re going to be in a higher interest rate environment.”

Trump is seeking to encourage more oil and gas production in the US, with the aim of lowering energy prices and reducing broader inflation. This, in turn, would allow the Fed to lower its key interest rate.

But this does not take into account the reaction of the financial markets, which also affects the cost of borrowing a house or a car. Since the Fed began cutting its benchmark rate in September, the yield on the 10-year Treasury note, which strongly influences mortgage rates, has actually increased substantially.

Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, says investors expect continued stronger growth, driven in part by Trump’s proposals to cut taxes and reduce regulation. In this scenario, the Fed would be less likely to cut its key rate.

Many investors are discounting Trump’s tariff threats, hoping he will seek to use them as leverage in international talks, rather than impose them permanently.

“I think President Trump was expected to bring in all the good policies and leave all the bad growth policies at the door,” Goldberg said.

Another trend that Trump has helped trigger is the rise of protectionist measures around the world, after two decades of globalization. This has led to a scramble by multinational corporations to move their production from countries that are the target of Trump’s ire, especially China, to others, such as Vietnam or Malaysia.

“Instead of globalization driving down prices, or at least limiting them, we are now relocating supply chains and increasing protectionist barriers,” Brusuelas said. Almost all economists expect prices to rise, although the increase could be modest.

Another change is that stubbornly high annual budget deficits also threaten to raise interest rates, because Wall Street investors may require higher yields to buy all the Treasuries needed to finance the debt.

Last week, the nonpartisan Congressional Budget Office said the deficit this year would likely reach $1.9 trillion and rise to $2.7 trillion within a decade. Trump’s proposals to extend his 2017 tax cuts and implement new ones, such as eliminating tip taxes, could add to the deficits even further.

“If we don’t lower fiscal deficits, we’re going to see higher long-term bond yields,” Fed Governor Chris Waller said earlier this month. “And that’s what we’re starting to see.”