ap photo Federal Reserve Chairman Jerome Powell speaks during a news conference following the Federal Open Market Committee meeting, Wednesday at the Federal Reserve in Washington.

WASHINGTON — The Federal Reserve kept its key interest rate unchanged Wednesday, brushing off President Donald Trump’s demands to lower borrowing costs, and said that the risks of both higher unemployment and higher inflation have risen, an unusual combination that puts the central bank in a difficult spot.

The Fed kept its rate at 4.3 percent for the third straight meeting, after cutting it three times in a row at the end of last year. Many economists and Wall Street investors still expect the Fed will reduce rates this year, but the sweeping tariffs imposed by Trump have injected a tremendous amount of uncertainty into the U.S. economy and the central bank’s policies.

During a press conference after the release of the policy statement, Chair Jerome Powell underscored that the tariffs have dampened consumer and business sentiment but have yet to noticeably harm the economy. At the moment, Powell said, there’s too much uncertainty to say how the Fed should react to the duties.

“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth, and a rise in unemployment,” Powell said. The impacts could be temporary, or more persistent, he added.

“There’s just so much that we don’t know,” he added. “We’re in a good position to wait and see.”

It is unusual for the Fed to face the risk of both higher prices and more unemployment. Typically, rising inflation occurs when consumers are spending freely and businesses, unable to meet all the resulting demand, raise their prices instead, as happened after the pandemic. Meanwhile, increasing unemployment occurs in a weaker economy, which usually slows spending and cools inflation.

A combination of both higher unemployment and steeper inflation is often referred to as “stagflation” and strikes fear in the hearts of central bankers, because it is hard for them to address both challenges. It last occurred on a sustained basis during the oil shocks and recessions of the 1970s.

Most economists say, however, that Trump’s sweeping tariffs do pose the threat of stagflation. The import taxes could both lift inflation by making imported parts and finished goods more expensive, while also raising unemployment by causing companies to cut jobs as their costs rise.

The Fed’s goals are to keep prices stable and maximize employment. Typically, when inflation rises, the Fed raises rates to slow borrowing and spending and cool inflation, while if layoffs rise, it would cut rates to spur more spending and growth.

At the beginning of the year, analysts and investors expected the Fed would reduce its key rate two or three times this year, as the inflation spike that followed the pandemic continued to cool. Some economists also think the Fed should cut in anticipation of slower growth and worsening unemployment from the tariffs. But Powell was adamant that with the economy in good shape for now, the Fed can stay on the sidelines.

Several months ago, many analysts also expected the economy would achieve a “soft landing,” in which inflation would finally drop back to its target of 2 percent, while unemployment would stay low amid solid growth.

Yet on Wednesday Powell said that was less likely to be achieved.

“If the tariffs are ultimately put in place at those levels … then we won’t see further progress toward our goals,” Powell said. “At least for the next, let’s say, year, we would not be making progress toward those goals — again, if that’s the way the tariffs shake out.”