The main bank in the US, called the Federal Reserve, did not change its main interest rate on Wednesday. This happened even though President Donald Trump wanted them to lower the cost of borrowing money. The bank also said that it is now more likely that both the number of people without jobs and the cost of goods will go up. This is a strange situation that makes it hard for the bank to decide what to do next.

The central bank did not change its interest rate for the third meeting in a row. Before this, they had lowered it three times at the end of last year. Many experts still think the bank will lower rates this year. But, the new taxes on goods from other countries, started by Trump, have made the future of the U.S. economy and the bank's plans very unclear.

At a press conference after the policy was announced, Chair Jerome Powell said that the tariffs have made consumers and businesses feel less confident. However, he added that they haven't really hurt the economy yet. Powell also said that right now, there is too much uncertainty to know how the central bank should respond to the tariffs.

Powell said that if the large increases in taxes on imports continue, they will probably lead to higher prices, slower economic growth, and more people losing their jobs. He also said these effects might only last for a short time or could continue for longer.

Usually, the Fed doesn't have to deal with both higher prices and more people losing their jobs at the same time.

When a country has high unemployment and high inflation at the same time, it's often called "stagflation." This situation worries central bankers because it's difficult for them to fix both problems. The last time this happened for a long period was in the 1970s, during the oil crisis and economic difficulties.

However, many economists think that Trump's high taxes on imported goods could cause a problem called stagflation. These taxes might make imported parts and goods more expensive, which would increase prices. Also, when companies have higher costs, they might fire workers to save money, which could mean more people lose their jobs.

The US Federal Reserve wants to control prices and create as many jobs as possible. When prices go up, the Fed usually increases interest rates to make people borrow and spend less, which helps to reduce inflation. If people start losing their jobs, the Fed might lower rates to encourage more spending and help the economy grow.

At the start of the year, experts and investors thought the main interest rate would be cut a few times because prices were not rising as fast after the pandemic. Some economists also think the rate should be cut because they expect the economy to grow more slowly and more people to lose their jobs because of tariffs. But Powell said strongly that because the economy is good now, the Federal Reserve can wait.

Several months ago, many experts also thought the economy would have a "soft landing". This means inflation would fall to its goal of 2%, and unemployment would remain low with good growth.

But on Wednesday, Powell suggested that this was now less likely.

Powell said that if the tariffs are set at those levels, we will not make more progress towards our goals for at least the next year, if that is what happens with the tariffs.

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

“Based on how things develop, we might lower interest rates, or keep them the same. We need to wait and see what happens before we decide,” he said.

Krishna Guha, an expert at EvercoreISI, said the Federal Reserve's view of the current situation probably means they will wait longer to cut interest rates. He said that because the Fed sees both good and bad risks and called the economy strong, it shows they are not planning to cut rates in June now. Many economists think the Fed might not be ready to cut rates until September.

In April, Trump announced new taxes on goods from about 60 countries the US trades with, but he stopped most of them for 90 days. However, he kept the taxes on goods from China, which are now 145%. This weekend in Switzerland, the US and China will have their first important talks since Trump started this trade conflict.

The central bank's careful approach might cause more disagreements between the Fed and the Trump administration.

When asked at the press conference if Trump's requests for lower interest rates influenced the Fed, Powell said, "It doesn't affect our work. We will only consider the economic information, the future situation, and the risks."

If the Fed lowers interest rates, it could make it cheaper to borrow money for things like mortgages, car loans, and credit cards, but this is not certain.

A big problem for the central bank is how import taxes will affect prices.

Currently, the U.S. economy is quite strong, and prices are not increasing as fast as they were in 2022. People are spending a good amount of money, possibly buying things like cars before new taxes are added. Companies are continuing to hire employees regularly, and few people are out of work.

However, there are signs that inflation will get worse in the next few months. Studies of companies that make products and provide services show that they are paying more for materials from their suppliers. Also, a study by the Federal Reserve in Dallas found that almost 55% of manufacturing companies plan to charge their customers more because of higher taxes on imported goods.