Central banks will remain stable amid tariff-driven economic uncertainty.

The U.S. Federal Reserve has kept interest rates unchanged, rejecting President Donald Trump’s demand for lower borrowing costs and saying the risks of higher unemployment and higher inflation have risen.

The central bank has kept its benchmark at 4.25% to 4.5% since December, and it has been past after three consecutive cuts at the end of last year. Its vote makes the vote for stable interest rates consistent.

"Uncertainty about the economic outlook has increased further" because despite the pressure from the White House, it is justified.

Many economists and Wall Street investors still expect the Fed to lower it by two to three times this year, but the huge tariffs Trump imposed on the United States have injected huge uncertainty into the U.S. economy and the Fed’s policies.

The Fed said both prices and the risk of unemployment are increasing. But economists say it is a threat posed by Trump's widespread tariffs. Import taxes can both increase inflation by making imported parts and finished products more expensive, while also increasing unemployment by causing companies to lay off employees as costs rise.

The Fed said in a policy statement that the economy generally “continues to expand at a solid pace”, attributed to a decline in first-quarter output to record imports as businesses and households are eager to obtain new import taxes.

The Fed said it also "has strongly committed to supporting the largest employment and returning inflation to its 2% target."

One of the drivers behind its decision is the condition of the labor market and “inflationary pressures and inflation expectations and financial and international developments,” the Fed said.

In a work report released last week, the U.S. Department of Labor showed that 177,000 jobs have been added to the U.S. economy in the past 12 months. However, the report was employed before Liberation Day, when Trump announced his comprehensive tariff policy, which has since sparked global economic uncertainty. The ADP Job Report is a more direct metric showing a job growth of 62,000.

Federal Reserve Chairman Jerome Powell said after a press conference that interest rate decisions remain unchanged, leaving the central bank in a good response.

"For the time being, we have a full position to wait for a clearer attitude before considering any adjustments to our policy stance," Powell told reporters. "It's still a healthy economy, even though some very low-key sentiment from people and businesses are shrouded in this economy."

“The Fed statement was a statement of the obvious. They gave roughly equal airtime to the threats to growth and inflation, so that tells us we need to wait and see how the data shake out between now and the June meeting before deciding whether they're going to prioritise keeping inflation expectations contained or to address any hit to growth,” said Brian Jacobsen, chief economicist at Annex Wealth Management in Menomonee Falls, Wisconsin.