The Federal Reserve decided not to change its main interest rate on Wednesday. President Donald Trump wanted them to lower borrowing costs, but they did not. They also said that it is more likely that more people will lose their jobs and prices will increase. This is an unusual situation that makes things difficult for the central bank.

The central bank kept its interest rate at 4.3% for the third meeting in a row. They had lowered it three times at the end of last year. Many financial experts still think the bank will lower rates this year. But, the new taxes on imports from Trump have created a lot of doubt for the U.S. economy and the bank's plans.

At a press conference after the new policy was shared, Chair Jerome Powell explained that the tariffs have made people and businesses feel less positive. But, he also said that the tariffs haven't really hurt the economy yet. Powell added that right now, things are too unclear to know how the central bank should deal with the taxes.

Powell said that if the big increases in taxes on imported goods continue, they will probably lead to higher prices, slower economic growth, and more unemployment. He also said that these effects could be short-lived or last for a longer time.

The US central bank usually doesn't have to worry about both rising prices and rising job losses at the same time.

When unemployment and prices both rise quickly, it's often called "stagflation." This situation makes central banks worried because it's hard for them to solve both problems at the same time. It last happened for a long period in the 1970s, because of high oil prices and economic problems.

However, many economists think that Trump's taxes on goods from other countries could cause stagflation. These taxes might make prices go up because imported goods will cost more. They could also lead to companies firing workers as their costs increase, which means more people will be jobless.

The US central bank, called the Fed, wants to keep prices steady and ensure as many people as possible have jobs. Usually, if prices increase too fast, the Fed makes it more expensive to borrow money. This makes people spend and borrow less, which helps lower prices. But if companies start firing many workers, the Fed would lower interest rates to encourage more spending and help the economy grow.

At the start of the year, experts thought the Fed would lower its main interest rate a few times because prices were not rising as fast after the pandemic. Some economists also think the Fed should cut rates sooner because they expect the economy to grow less and more people to lose their jobs because of new taxes on imported goods. But Powell said firmly that since the economy is doing well now, the Fed can wait and see.

Several months ago, many experts thought the economy would have a "soft landing." This meant that prices would stop rising so fast and go back to the 2% target. Also, not many people would lose their jobs, and the economy would continue to grow well.

However, on Wednesday Powell said it was less likely to happen.

"If the planned taxes on imports are introduced at that high level, then we will stop moving towards our goals," Powell said. "For at least the next year, we would not be getting closer to those goals, if the taxes end up being that high."

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

“It's possible that interest rates will be reduced, or they might stay the same; we need to wait and see what happens before we decide," he said.

Krishna Guha, an expert, said the Fed's view of the economy probably means they will cut interest rates later. He said that because the Fed sees both good and bad points and calls the economy strong, they are likely not planning to cut rates in June. Many experts think the Fed might wait until September to cut rates.

In April, Trump announced large tariffs on goods from about 60 countries the U.S. trades with. However, he stopped most of these tariffs for 90 days, except for those on goods from China. The U.S. government put a 145% tax on products from China. This weekend in Switzerland, China and the U.S. will have their first important discussions since Trump started his trade dispute.

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

When asked if President Trump's wish for lower interest rates affected the Federal Reserve, Powell said, "It doesn't change how we do our job. We only think about the economic information, what we expect to happen, and the possible problems, and nothing else."

If the central bank lowers interest rates, it could make loans for things like houses, cars, and credit cards less expensive, but this isn't definite.

A big problem for the Fed is how tariffs will affect inflation.

Right now, the US economy is quite strong, and prices are not rising as quickly as they were in 2022. People are buying a lot, perhaps partly because they want to buy things like cars before new taxes make them more expensive. Companies are also employing new staff regularly, so not many people are out of work.

However, there are signs that prices will continue to rise in the next few months. Businesses that make things and those that provide services say their suppliers are charging them more. Also, a study found that almost 55% of manufacturing companies plan to make their customers pay more because of higher taxes on imported goods.