The Federal Reserve has not cut rates, and keeps is holding its benchmark lending rate steady at a range of 4.25% to 4.5%

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The Federal Reserve on Wednesday left its key interest rate unchanged as it monitors shifting trade policy and signs of a slowing economy.As widely anticipated, the Federal Open Market Committee (FOMC) maintained its benchmark overnight lending rate within a target range of 4.25% to 4.5%, where it has remained since December. The decision came against a backdrop of heightened uncertainty in both the political and economic arenas.In its post-meeting statement, the Fed acknowledged the rising instability and how it’s shaping policy deliberations.“Uncertainty about the economic outlook has increased further,” the statement read. “The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”While the statement did not directly mention tariffs, Fed Chair Jerome Powell is expected to address the issue during his post-meeting press conference.Balancing the Fed’s dual mandate—promoting full employment and maintaining stable prices—has grown more complicated amid President Donald Trump’s ongoing tariff strategy.The statement highlighted the dual threat posed by tariffs: the potential to drive up inflation while simultaneously dampening economic growth. This raises the specter of stagflation, a rare phenomenon in the U.S. since the early 1980s.Despite this, policymakers largely agree that the Fed is well-positioned to remain patient as it navigates current conditions, noting that the economy, while showing signs of strain, remains broadly resilient.The Fed's decision coincides with a crucial phase in trade negotiations between the White House and major U.S. trading partners. A 90-day negotiating window began in early April, during which President Trump imposed a blanket 10% tariff on imports and hinted at further “reciprocal” duties depending on the outcome of talks.As news around the trade conflict shifts almost daily, the U.S. economy has sent mixed signals regarding growth, inflation, and overall confidence among consumers and businesses.Gross domestic product (GDP), the most comprehensive measure of economic activity, declined by 0.3% in the first quarter—largely due to weaker consumer and government spending and a preemptive surge in imports ahead of the new tariffs. Nevertheless, most economists on Wall Street expect a return to positive growth in the second quarter.The FOMC statement acknowledged that “swings in net exports have affected the data,” but reiterated its view that the economy “has continued to expand at a solid pace.”