The main bank in the US, the Federal Reserve, did not change its main interest rate on Wednesday. This decision ignored President Donald Trump, who wanted the bank to make borrowing money cheaper. The bank also said that there is now a bigger chance of both more people being out of work and prices going up. This is a strange situation and makes it hard for the central bank to decide what to do next.

The US 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 lower rates this year, but the high taxes on imported goods put in place by Trump have created a lot of doubt for the US economy and the central bank's plans.

At a press conference after the new policy was announced, Chairman Jerome Powell said that the tariffs have made people and businesses feel less sure about the future, but they haven't clearly damaged the economy yet. Powell added that right now, it's too unclear to say how the Federal Reserve should respond to these taxes.

Powell said that if the big increases in import taxes continue, they will probably cause prices to rise, the economy to grow more slowly, and more people to lose their jobs. He added that the effects could be short-term or last longer.

It's not common for the Fed to have to deal with both rising prices and more people losing their jobs at the same time. Usually, prices go up when people are spending a lot and businesses increase prices because they can't produce enough to keep up with the high demand, like after the pandemic. On the other hand, more people lose their jobs when the economy is weak, which usually means people spend less and prices don't increase as quickly.

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

However, most economists think that Trump's big tariffs could lead to stagflation. These taxes on imported goods might make prices go up because imported things cost more. They could also cause more people to lose their jobs as companies might fire staff when their costs increase.

The main goals of the Fed are to keep prices steady and create as many jobs as possible. Usually, when prices increase quickly, the Fed increases interest rates to reduce borrowing and spending, which helps to control inflation. However, 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 going up as quickly. Some experts also believe the Fed should cut rates because they think the economy will grow more slowly and more people will lose their jobs because of new taxes on imported goods. But Powell is sure that because the economy is doing well right now, the Fed can wait and see.

Several months ago, many experts also thought the economy would slowly and successfully return to normal. This meant that prices would stop rising so fast and fall to the target of 2%. At the same time, there would still be plenty of jobs and good economic growth.

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

Powell said, "If the taxes on imported goods are set at those levels, we won't reach our goals. For about the next year, we wouldn't get closer to those goals, if those taxes are applied in that way."

Powell also said the Fed's next step will partly depend on which problem gets worse: rising prices or people losing jobs.

"Depending on what happens, we might cut interest rates, or we might keep them as they are. We need to wait and see before we decide," he said.

Krishna Guha, an analyst, said the Federal Reserve's view of the economy likely means they will cut interest rates later. He thinks the Fed is not planning a June cut because they see both good and bad risks and say the economy is strong. Many economists now believe the Fed might wait until September to cut rates.

In April, Trump declared significant taxes on goods from around 60 countries the US trades with, but he stopped most of these for 90 days, except for the taxes on products from China. The government has put a 145% tax on Chinese goods. China and the US are planning to have their first major discussion this weekend in Switzerland since Trump started this trade conflict.

The central bank's careful approach could cause more problems between the Fed and the Trump government. 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 struggles in the next few months.

When 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 in the future, and the possible dangers, and nothing else."

If the central bank lowers interest rates, it could make other loans cheaper, like for homes, cars, and credit cards, but this is not definite.

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

At the moment, the US economy is generally strong, and prices are not rising as fast as they were in 2022. People are spending quite a lot, perhaps buying things like cars before new taxes are added. Companies are still hiring employees regularly, and not many people are without jobs.

However, it looks like inflation will get worse in the next few months. Surveys of companies that make things and offer services show they are paying more to their suppliers. Also, a survey by the Federal Reserve in Dallas found that about 55% of manufacturing companies expect to charge customers more because of higher costs from tariffs.