The main US bank decided not to change interest rates this week, even though President Trump wanted them to. They also said that both unemployment and inflation could go up, which makes things difficult for the bank.

The US central bank kept its interest rate at 4.3% for the third meeting in a row. This happened after they lowered it three times at the end of last year. Many experts and investors still believe the bank will lower rates this year. However, the new taxes on goods from other countries, started by Trump, have made the US economy and the bank's plans very unclear.

At a press conference after the policy statement, Chair Jerome Powell said that the taxes on imports have made people and businesses feel less positive, but they haven't really damaged the economy yet. Powell also said that right now, it's too unclear to say how the central bank should react to these taxes.

Powell said that if the big increases in import taxes continue, they will likely cause prices to rise, slow down the economy, and increase joblessness. He added that these effects could be temporary or last longer.

It's not common for the Fed to face the problem of both higher prices and more people losing their jobs. Usually, prices go up when people are spending a lot and businesses can't keep up, so they charge more, like after the pandemic. But when more people are unemployed, it's usually because the economy is not strong, which means people spend less and prices don't rise as quickly.

When unemployment is high and prices are rising quickly, it's called "stagflation." This situation makes central bankers very concerned because it's hard for them to solve both problems at once. It happened for a long time in the 1970s due to oil problems and economic downturns.

However, many economists think Trump's tariffs could cause stagflation. These taxes on imported goods might make prices go up and cause companies to cut jobs because their costs are higher, which could mean more people lose their jobs.

The Federal Reserve aims to keep prices stable and help as many people as possible have jobs. Usually, if prices increase too much (inflation), the Fed raises interest rates to slow down borrowing and spending, which helps reduce inflation. On the other hand, if many people lose their jobs, the Fed might lower interest rates to encourage more spending and help the economy grow.

At the start of the year, experts thought the Fed would lower interest rates a couple of times because prices were not rising as fast as before. Some people also believe the Fed should cut rates because they think the economy will grow more slowly and more people will lose their jobs due to new taxes on imports. However, Mr. Powell said strongly that since the economy is doing well now, the Fed should wait and do nothing.

A few months ago, many experts thought the economy would slow down without causing big problems. This meant prices would go down to the 2% goal, and not many people would lose their jobs because the economy was still growing well.

However, on Wednesday, Powell suggested that it was less probable to happen.

Powell said that if these taxes are put in place at those levels, they won't make more progress towards their goals, at least for the next year, if that's how the taxes happen.

Powell also said the Fed's next decision will depend on whether inflation or unemployment gets worse.

Depending on what happens, we might lower interest rates, or we might keep them the same. We need to see what happens before we decide,

Krishna Guha, an analyst, believes the Federal Reserve's view of the economy suggests they will likely delay lowering interest rates. He explained that because the Fed sees both potential positives and negatives and describes the economy as strong, they probably aren't planning a rate cut in June. Many economists think the Fed might not be prepared to cut rates until September.

In April, Trump announced many tariffs on goods from about 60 countries that trade with the U.S., but he stopped most of them for 90 days, except for tariffs on China. Goods from China now have a 145% tariff. This weekend in Switzerland, the U.S. and China will have their first important talks since Trump started this trade conflict.

The central bank's careful approach might cause more disagreement between the Fed and the Trump government. On Sunday, in a TV interview, Trump again asked the Fed to lower interest rates. Trump has stopped threatening to try and fire Powell, but he might think about it again if the economy has problems in the next few months.

At the press conference, when someone asked if Trump's requests for lower interest rates affected the Fed, Powell said, "It doesn't change how we do our job. We will only think about economic information, what we expect for the future, and the possible dangers, and nothing else."

If the central bank lowers interest rates, it might make it cheaper to borrow money for things like houses, cars, and credit cards, but this isn't certain.

A big problem for the Fed is how taxes on imported goods will affect inflation.

Right now, the U.S. economy is quite strong, and prices are not rising as fast as they were in 2022. People are buying a good amount of things, maybe including cars before new taxes are added. Companies are still hiring people regularly, so not many people are unemployed.

However, there are signs that inflation will get worse in the next few months.