The main US bank, the Federal Reserve, decided not to change its main interest rate on Wednesday. This happened even though President Donald Trump wanted them to lower it. The bank also said that it is now more likely that both unemployment will increase and prices will rise. This is an unusual situation that makes things difficult for the bank.

The central bank kept its interest rate at 4.3% for the third meeting in a row, after lowering it three times at the end of last year. Many experts and investors still think the bank will cut rates this year, but new taxes ordered by Trump have made the future of the U.S. economy and the bank's plans much less clear.

At a press conference after the policy was announced, Chair Jerome Powell said that the taxes have made people and businesses feel less confident, but they haven't really hurt the economy yet. Powell also said that right now, it's too unclear to know how the Fed should react to the taxes.

"If the big increases in taxes on imports that have been announced continue, they will probably cause prices to go up, the economy to grow more slowly, and more people to lose their jobs," Powell said. He added that these effects could be short-term or last longer.

It's unusual for the central bank to face the problem of both rising prices and more people losing their jobs. Usually, prices increase when people are spending a lot and businesses can't keep up with the demand, so they raise prices, like after the pandemic. On the other hand, when more people are unemployed, the economy is weaker, which usually means people spend less and prices don't rise as fast.

When unemployment is high and prices are rising fast, it's called "stagflation." This situation worries central bankers a lot because it's difficult for them to fix both problems at once. It last happened for a long time in the 1970s, during the oil crisis and economic downturns.

However, most economists think that Trump's taxes on imported goods could cause stagflation. This means prices could go up because imported parts and products cost more. At the same time, companies might cut jobs because their costs increase.

The main goals of the US Federal Reserve are to control prices and create as many jobs as possible.

At the start of the year, experts thought the central bank would lower its main interest rate two or three times, because prices were not rising as fast after the pandemic. Some economists also believe the bank should cut rates because they expect the economy to grow more slowly and unemployment to increase due to new taxes on imports. But the head of the central bank strongly said that because the economy is doing well now, the bank does not need to do anything.

A few months ago, many experts thought the economy would get better slowly without big problems. They expected prices to stop going up so quickly and reach the 2% goal again, and that most people would still have jobs because the economy was growing well.

But on Wednesday, Powell said that was probably not going to happen.

Powell said that if the tariffs are set at those levels, they will not make progress towards their goals, at least for the next year.

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

He said they need to wait and see what happens before deciding whether to lower interest rates or keep them the same.

Krishna Guha, an expert, believes the central bank's opinion of the current situation means they will likely delay cutting interest rates. He explained that because they see both positive and negative possibilities and describe the economy as strong, it indicates they are not planning to cut rates in June at this time. Many experts believe the central bank might not be prepared to cut rates until September.

Trump introduced major tariffs on goods from around 60 countries in April, but stopped most of them for 90 days, except for those on China. The government has put a 145% tax on goods from China. China and the U.S. plan to have their first important talks since Trump started his trade disagreements this weekend in Switzerland.

The central bank's careful approach could 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 change how we do our job. We will only think about the economic information, what we expect to happen, and the possible risks."

If the central bank lowers interest rates, it could make it cheaper to borrow money for things like houses, cars, and credit cards, but this is not certain.

A major problem for the Fed is how import taxes will affect prices.

Currently, the US economy is quite strong, and prices are not rising as fast as they were in 2022. People are buying a lot, perhaps buying cars before new taxes make them more expensive. Companies are hiring new employees steadily, and few people are out of work.

However, there are signs that inflation will get worse in the next few months. Surveys of companies in manufacturing and services show that their suppliers are increasing prices. Also, a survey by the Federal Reserve’s Dallas branch reported that almost 55% of manufacturing companies plan to charge their customers more because of higher tariffs.