WASHINGTON — The Federal Reserve kept its key interest rate unchanged Wednesday, brushing off President Donald Trump’s demands to lower borrowing costs, and said that the risks of higher unemployment and higher inflation have risen.

The Fed kept its rate at 4.3% for the third straight meeting, after cutting it three times in a row at the end of last year. Many economists and Wall Street investors still expect the Fed will reduce rates two or three times this year, but the sweeping tariffs imposed by Trump have injected a tremendous amount of uncertainty into the U.S. economy and the Fed’s policies.

It is unusual for the Fed to say that the risk of both higher prices and more unemployment have increased. But economists say that is the threat created by Trump’s sweeping tariffs. The import taxes could both lift inflation by making imported parts and finished goods more expensive, while also raising unemployment by causing companies to cut jobs as their costs rise.

As a result, the tariffs have put the Fed in a difficult spot. The Fed’s goals are to keep prices stable and maximize employment. Typically, when inflation rises, the Fed raises rates to slow borrowing and spending and cool inflation, while if layoffs rise, it would reduce rates to spur more spending and growth.

At a press conference after the release of the policy statement, Powell repeatedly said the current policy rate puts Fed officials in a good position to “wait and see” what the ultimate impacts of the tariffs are. At the moment, Powell said, there’s too much uncertainty to say how the Fed will react.

“Depending on how things play out, it could include rate cuts, it could include us holding where we are, we just need to see how things play out before we make those decisions,” he said.

Trump announced sweeping tariffs against about 60 U.S. trading partners in April, then paused most of them for 90 days, with the exception of duties against China. The administration has subjected goods from China to a 145% tariff. The two sides are scheduled to hold their first high-level talks since Trump launched his trade war this weekend in Switzerland.

The central bank’s caution could lead to more conflict between the Fed and the Trump administration. On Sunday, Trump again urged the Fed to cut rates in a television interview and said Powell “just doesn’t like me because I think he’s a total stiff.”

With inflation not far from the Fed’s 2% target for now, Trump and Treasury Secretary Scott Bessent argue that the Fed could reduce its rate. The Fed pushed it higher in 2022 and 2023 to fight inflation.

Asked at the press conference whether Trump’s calls for lower rates has any influence on the Fed, Powell said, “(It) doesn’t affect doing our job at all. We’re always going to consider only the economic data, the outlook, the balance of risks, and that’s it.”

If the Fed were to cut, it could lower other borrowing costs, such as for mortgages, auto loans, and credit cards, though that is not guaranteed.

Trump also said he wouldn’t fire Powell because the chair’s term ends next May and he will be able to appoint a new chair then. Yet if the economy stumbles in the coming months, Trump could renew his threats to remove Powell.

A big issue facing the Fed is how tariffs will impact inflation. Nearly all economists and Fed officials expect the import taxes will lift prices, but it’s not clear by how much or for how long. Tariffs typically cause a one-time increase in prices, but not necessarily ongoing inflation. Yet if Trump announces further tariffs — as he has threatened to do on pharmaceuticals, semiconductors, and copper — or if Americans worry that inflation will get worse, that could send prices higher in a more persistent way.

Asked about on whether the Fed has opinion about potential looming shortages of goods and price increases in a few weeks due to tariffs, Powell said, “We shouldn’t be involved even verbally in the questions about the timing of these things. … Ultimately this is for the administration to do. This is their mandate, not ours.”

Krishna Guha at EvercoreISI said the Fed’s assessment of current conditions likely pushes back the timetable for a rate cut. “The combination of the two-sided risk assessment and the characterization of the economy as solid suggest the Committee is not looking to tee up a June cut at this juncture.”

Economists and the Fed are closely watching inflation expectations, which are essentially a measure of how much consumers are concerned that inflation will worsen.