After three successive interest rate cuts, the Federal Reserve on Wednesday made no change in its benchmark lending rate amid new economic uncertainties over the outlook for inflation and President Trump's continued threats of new tariffs and other measures.

The Fed had been widely expected to ease back from the slow but steady stream of rate cuts last year, because economic growth has been stronger than many expected and the inflation rate has inched up after months of steady declines.

The Fed's interest rate decisions have far-reaching impacts on almost every facet of the economy, from corporate investment decisions and jobs to the price of cars and groceries. And its decisions rest on its analysis of forces likely to shape the course of the economy in coming months.

The avalanche of unexpectedly dramatic policy pronouncements in the first days of the new Trump administration has made the future unusually murky for such analysis. The president has promised a pro-growth agenda with lower taxes and reduced government regulation.

But he’s also threatening to impose higher tariffs on multiple countries, which could weigh on U.S. economic activity and reignite inflation.

That raises the possibility that the Fed could even reverse course and hike interest rates, which could put it on a collision course with Trump.

“Borrowers shouldn’t bank on the Fed being in any hurry to cut interest rates again,” said Greg McBride, chief financial analyst at Bankrate.com. “If we see inflation pressures ease on a consistent basis, I could see the Fed cutting interest rates 2 or 3 times this year. But if the progress on inflation remains stalled out, or if inflation picks up, the Fed will not cut interest rates at all.”

The full extent and timing of Trump’s various policy actions are not in view yet. But Trump clearly wants lower interest rates. He’s already said so on a number of occasions, and analysts expect the president may lash out at Fed Chair Jerome H. Powell if he doesn’t respond, as Trump did in his first term, adding to the pressures for the independent central bank.

The Fed’s policy statement Wednesday gave no new indication of what lies ahead, although Powell could offer clues at a news conference in the afternoon.

At the end of December, Powell and his colleagues foresaw two quarter-point interest rate cuts for 2025, after shaving a full percentage point over three straight meetings last fall and winter.

By most accounts, the Fed’s key interest rate, now at a range of 4.25% to 4.5%, is somewhat restrictive in terms of the impact on the economy. And financial markets still expect two rate cuts this year.

But the prospect of significantly higher tariffs on imports and the launch already of Trump’s promised mass deportations of undocumented workers have the potential to spark higher inflation.

The departure of many foreign workers could shrink the labor supply and cause employers to bid up wages. Fatter paychecks, coupled with the added cost of new tariffs, would almost certainly add to inflationary pressures.

Many companies have already said they would expect to pass tariff costs on to consumers.

And for California, the outlook is further clouded by the current and still-to-come impact of the wildfires. The huge scale of the rebuilding is likely to fuel higher prices for things like lumber, and will probably lead to higher rents and home prices in the short term.

Overall consumer price inflation in the U.S. has come down sharply since peaking at near double digits in mid-2022, stoked by the pandemic, but in recent months has hovered near 3%. The Fed wants to get that down to 2%.

Progress has been impeded by higher-than-expected increases for housing as well as sharply higher prices last year for services such as motor vehicle insurance and repair costs. Food and energy prices also jumped late last year.

Since taking office, Trump has said he’ll bring both inflation and interest rates down by lowering oil prices, calling on OPEC to pump out more crude even as the president seeks to boost domestic production.

That alone would chip away at inflation, although analysts say that other Trump-favored policies such as tariffs aren’t compatible with lower prices.

“The mainstream [economic] view is that inflation is going to come down further,” said Christopher Rupkey, chief economist at Fwdbonds, an economic and markets research firm. “The 800-pound gorilla in the room, of course, is the newly elected president. His view on interest rates is known… Regardless of the logic, he just wants interest rates to be lower.”

Fed pauses interest rate cuts. What happens next may depend on Trump

The Federal Reserve announced a pause in interest rate cuts, citing economic uncertainties over inflation and potential tariffs from President Trump. This decision, made amidst new economic challenges, could lead to a potential reversal of interest rate cuts if inflation rises. Analysts are uncertain about future interest rate decisions, as Trump's policies could impact inflation and the economy. The Fed's policy statement indicates a somewhat restrictive interest rate, which could influence corporate investment decisions, employment, and prices of various goods and services.