The Fed keeps interest rates stable as it causes a president to kick out uncertainty, which has been putting pressure on the central bank to lower them.

It was an ironic, causing a reversal of whipping, for Fed policymakers, who were on the verge of a rare feat a few months ago - falling down historic inflation without triggering mass layoffs, known as a "soft landing" and ready to continue cutting borrowing costs. But President Donald Trump's rapid escalation of global trade has put the Fed and its leaders in trouble, and they believe the waiting method may be their best strategy at the moment.

Seema Shah, chief global strategist at major asset management, said: “The Fed is almost in a nearly impossible situation and its two tasks may go in the opposite direction.

"But government policies themselves are very uncertain - will determine the timing and extent of these moves," she wrote in a notice to clients on Wednesday.

The concern is that the economy damaged by tariffs will force the Fed to lower interest rates to avoid unemployment and risk increasing inflation. After reaching a peak above 9% in mid-2022, annual inflation has hovered north of the central bank's 2% target.

Fed Chairman Jerome Powell said Wednesday that interest rates holding PAT allow the Fed to "wait and understand" the economy's development. But policymakers warned in a statement Wednesday that “the risk of higher unemployment and higher inflation has risen”, with concerns about “stagnation” renewed concerns that job losses and price increases continue even if the economy is lagging behind.

"The tariff shock will lower real GDP growth and at the same time lower prices, putting the Fed in a difficult situation," Brian Coulton, chief economist at Fitch Ratings warned in a report Wednesday afternoon. "The policy moves necessary to maintain full employment are the opposite of what is necessary to include inflation. It is problematic to hit one policy leverage to two conflicting targets."

Politics is increasing difficulties and the Fed's decision may arouse Trump's anger. Trump has violated long-term norms of political influence on monetary policy by repeatedly slamming Powell (who appointed him in 2018), and has escalated his attack in recent weeks.

"Low interest rates, Jerome, stop playing a political role!" he wrote on "Sociality in Truth" on April 4. Two weeks later, he released the nickname Powell "too late" and said his termination wasn't fast enough! "In another post a week later, Trump called Powell the "main loser."

Powell told reporters on Wednesday that Trump's comments had no impact.

"It really doesn't affect how we work or how we work," he said, adding that neither he asked for a meeting with Trump nor the president asked for it. President Joe Biden reappointed Powell in 2022, and despite recent criticism, Trump told NBC News' Kristen Welker last week that he would not seek to remove him before the end of his term in May 2026.

"Why should I do this? I can replace that person in another short time," he said.

The challenges in recent months mark the second time Powell weighs in on how to deal with the economic impact of Trump’s trade policy. In 2019, Trump also threatened China's higher tariffs. Powell faced similar pokes from Trump through Twitter outpost at the time, and he lowered interest rates three points to get ahead of the U.S. economy from higher tariffs.

Powell said Wednesday that this time was different. He noted that in 2019, the Fed had less concerns about the impact of inflation on lower interest rates because the price was slower than it is now. Core personal consumption spending is the Fed’s preferred inflation measure, showing prices rose 2.6% in March, while the same measure fell below 2% for the full year of 2019.

"In this case, we can preempt because we don't actually know what the correct response to the data is before seeing more," Powell said.

While the market expects the Fed to triple interest rates by the end of the year, some analysts are not sure. "If we have basic cases of stable labor markets and rising inflation, we don't see the path to cuts in 2025," Bank of America researchers said Wednesday.

Meanwhile, Powell avoided future action given the broad uncertainty Trump has created for company owners, small business owners and consumers.

"In some cases, it's appropriate for us to lower interest rates this year. Some situations won't," he told reporters on Wednesday. "We just don't know."