Fed Chair Jerome Powell stated that the risk of higher inflation and unemployment has increased|@federalreserve|X

The Federal Reserve held interest rates steady at 4.25% to 4.5% on Wednesday, and warned about the nation’s economy.

The Federal Reserve Chair Jerome Powell is in a wait-and-watch mode to see how President Donald Trump’s tariffs would impact the economy. “We can afford to be patient as things unfold,” he said.

While the Fed avoided naming tariffs directly, it cited volatile trade data as a key challenge for it to determine changing rates.

The move comes as the White House engages in intense negotiations with major US trading partners as the 90-day pause on reciprocal tariffs kicked off in early April. President Trump has already imposed a blanket 10% tariff on all US imports.

Powell stated that the risk of higher inflation and unemployment has increased. But he also reassured that the US economy is “resilient and doing fairly well.”

However, economists warn of stagflation. It is a period of high inflation and weak economic growth.

Markets are betting the Fed won’t cut rates until July 2025.

Meanwhile, President Trump continues to pressure the Fed to lower rates, but most officials want more proof of economic weakness before pivoting.