The Federal Reserve announced it will keep interest rates unchanged.

Federal Chairman Jerome Powell made the announcement during the Fed’s regular press conference.

“Despite heightened uncertainty, the economy is still in a solid position,” Powell said. “The unemployment rate remains low, and the labor market is at or near maximum employment. Inflation has come down a great deal but has been running somewhat above our 2% longer-run objective. In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. The risks of higher unemployment and higher inflation appear to have risen, and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments.”

The Federal Open Market Committee (FOMC) – the monetary policymaking body of the Federal Reserve System –released a statement prior to Powell’s press conference.

“Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace,” the statement read. “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.

“The committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. In support of its goals, the committee decided to maintain the target range for the federal funds rate at 4 1/4% to 4 1/2 %.”

However, Powell in his press conference discussed current economic policies and their potential effect on the economy going forward.

“If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” he said. “The effects on inflation could be short-lived—reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent. Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and, ultimately, on keeping longer-term inflation expectations well anchored.”