The Federal Reserve decided not to change its main interest rate on Wednesday. They did this even though President Donald Trump wanted them to lower borrowing costs. The Fed also said that there is now a higher risk of both more people losing their jobs and prices going up. This is an unusual situation and makes it hard for the central bank to decide what to do.

The US central bank kept interest rates at 4.3% for the third meeting in a row, after lowering them three times at the end of last year. Many experts and investors still think the central bank will lower rates this year, but Trump's new taxes on imports have created a lot of doubt about the US economy and the bank's plans.

At a press conference after the new policy was announced, Chair Jerome Powell said that the taxes have made people and businesses feel less confident. But he also said that these taxes have not yet seriously hurt the economy. Powell explained that there is too much uncertainty right now to know how the Federal Reserve should respond to these taxes.

"If the big tax increases stay high, they will probably cause prices to rise, economic growth to slow down, and more people to lose their jobs," Powell said. These effects might be short-lived or last longer, he added.

It's not common for the Federal Reserve to have to deal with both higher prices and more people losing their jobs at the same time.

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

However, most economists think that Trump's tariffs could cause stagflation. These taxes on imported goods might make prices higher because imports cost more. They could also make companies fire workers as their costs increase.

The central bank wants to keep prices steady and help people find jobs. When prices go up, the bank usually increases interest rates. This makes it more expensive to borrow and spend, which helps slow down rising prices. If people start losing jobs, the bank might lower interest rates to encourage more spending and help the economy grow.

At the start of the year, experts and investors thought the US central bank would lower interest rates a couple of times. This was because prices were not rising as fast after the pandemic. Some economists also think the bank should lower rates now because they expect the economy to grow more slowly and more people to lose their jobs because of new taxes on imports. But Mr. Powell strongly believes that because the economy is doing well for now, the central bank can wait and see.

Several months ago, many experts thought the economy would slowly and safely return to normal. This meant that prices would stop rising so quickly and would return to the target of 2%. At the same time, they expected that there would still be many jobs and that the economy would continue to grow well.

However, on Wednesday Powell stated that this outcome was not as probable.

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

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

He said, "Depending on what happens, we might lower interest rates, or we might keep them the same. We need to see how things develop before we decide."

Krishna Guha, an expert, said the Fed's view of the current situation probably means they will wait longer to lower interest rates. He said that because the Fed sees both positive and negative risks and calls the economy strong, they likely won't lower rates in June. Many experts think the Fed might not lower rates until September.

In April, Trump announced many tariffs on goods from about 60 countries that trade with the U.S. However, he stopped most of them for 90 days, except for the tariffs on goods from China. These tariffs on Chinese goods are now 145%. China and the U.S. are planning to have their first important talks since Trump started this trade conflict. These talks will happen this weekend in Switzerland.

The central bank's careful approach might cause more disagreements between the Fed and the Trump administration. On Sunday, Trump again asked the Fed to lower interest rates in a TV interview. Trump is no longer threatening to fire Powell, but he might change his mind if the economy does not do well in the next few months.

When reporters asked if Trump's request for lower interest rates influenced the Fed, Powell said, "It doesn't change how we do our job. We will only think about economic information, the future, and the possible risks. That's all."

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

A big problem for the Fed is how tariffs will change inflation. Most economists and Fed officials think these import taxes will make prices higher, but they don't know how much or for how long. Tariffs usually make prices go up one time, but not cause inflation that keeps going.

Currently, the US economy is quite strong, and prices are not rising as fast as they were in 2022. People are buying a good amount, perhaps because they want to purchase items like cars before extra taxes are added. Companies are also hiring new employees regularly, and there are not many people without jobs.

However, it seems that inflation will probably get worse in the next few months.