The Federal Reserve held interest rates steady on Wednesday, just weeks after President Donald Trump intensified calls for lower borrowing costs and voiced eagerness about the potential “termination” of Fed Chair Jerome Powell.

In recent days, Trump has dialed back his attacks on Powell, saying he will not fire Powell before the end of the top central banker’s term next year. Trump has reiterated his displeasure with the level of interest rates, however, urging the central bank to lower them.

Speaking at a press conference in Washington, D.C., on Wednesday, Powell said the economy remains in “solid shape” but warned Trump’s tariff policy could cause higher inflation and an economic slowdown.

“If the large increase in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation and a slowdown of economic growth,” Powell said Wednesday.

“All of these policies are evolving, however, and their effects on the economy remain highly uncertain,” Powell added.

When asked about Trump’s call for lower rates, Powell shrugged off criticism from the president.

“It doesn’t affect our doing our job at all,” Powell said. “We’re always going to consider only the economic data, the outlook, the balance of risks – and that’s it.”

The move marked the Fed’s second consecutive decision to maintain the current level of interest rates, repeating an approach taken in January. Before that, the Fed had cut rates at three consecutive meetings.

“For now, it does seem like a fairly clear decision for us to wait and see,” Powell said.

The Federal Open Market Committee (FOMC), a policymaking body at the Fed, said Wednesday that key economic indicators had improved but it cautioned of heightened economic uncertainty.

“Risks of higher unemployment and higher inflation have risen,” the FOMC said in a statement.

Last month, Powell raised the possibility that Trump’s tariffs may cause what economists call “stagflation,” which is when inflation rises and the economy slows.

If the Fed raises interest rates as a means of protecting against tariff-induced inflation under such a scenario, it risks stifling borrowing and slowing the economy further. On the other hand, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to boost spending and worsen inflation.

Still, Powell pointed to solid economic performance as a reason to take a patient approach as policymakers await the impact of tariffs.

“For the time being, we are well-positioned to wait for greater clarity,” Powell told an audience at the Economic Club of Chicago.

Powell noted the possibility of a shift in economic conditions, saying, “Life moves pretty fast.”

The rate decision arrives days after fresh data showed robust job growth in April.

Despite flagging consumer sentiment and market turmoil, the labor market has provided a bright spot since Trump took office. Meanwhile, inflation cooled in March, the most recent month for which data is available.

Even so, recession fears are mounting on Wall Street as Trump’s tariffs threaten to upend global trade. Goldman Sachs earlier this month hiked its odds of a recession from 35% to 45%. JPMorgan pegged the probability of a recession this year at 60%.

A government report last week showed the U.S. economy shrank over the first three months of 2025, much of which took place as Trump’s flurry of tariff proposals stoked uncertainty among businesses and consumers.

U.S. gross domestic product, or GDP, declined at a 0.3% annualized rate over three months ending in March, according to government data released on Wednesday. The figure marked a sharp dropoff from 2.4% annualized growth over the final three months of 2024.

The rate decision on Wednesday also marks the first adjustment of borrowing costs since Trump’s closely watched “Liberation Day” tariff announcement on April 2, which triggered the biggest single-day stock market drop since the COVID-19 pandemic.

Days later, Trump suspended a major swathe of the tariffs, sending the market to one of its largest ever single-day increases. A simultaneous escalation of tariffs on Chinese goods kept the effective tariff rate at its highest level in more than a century, the Yale Budget Lab found.

The White House is seeking to strike trade agreements with dozens of U.S. trade partners before the 90-day suspension of so-called “reciprocal tariffs” expires in July.

“As we gain a better understanding of the policy changes, we will have a better sense of the implications for the economy,” Powell said last month.