02:40 PM EDT, 05/07/2025 (MT Newswires) -- The Federal Reserve on Wednesday left its benchmark lending rate unchanged for a third straight meeting, saying that upside risks to inflation and unemployment have increased.

The Federal Open Market Committee kept interest rates in the range of 4.25% to 4.50%, in line with Wall Street's expectations. Policymakers cut rates by 50 basis points in September and by 25 basis points each in November and December.

"Uncertainty about the economic outlook has increased further," the FOMC said Wednesday following its two-day meeting. "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."

President Donald Trump has repeatedly called on the Fed to reduce interest rates. In a social media post last week, Trump said there's "no inflation" in the US, while employment is strong.

Official data showed last month that US consumer inflation unexpectedly turned negative in March in what was its first monthly decline since May 2020. Last week, government data showed that the world's largest economy added more jobs than expected in April, while the unemployment rate remained unchanged at 4.2%.

Reiterating its remarks from March, the FOMC said Wednesday that inflation continues to be somewhat elevated, while the unemployment rate "has stabilized at a low level in recent months, and labor market conditions remain solid."

Last month, Trump declared a 90-day pause on certain tariffs for non-retaliating countries. Officials from the US and China are due to meet in Switzerland this weekend to help resolve a trade standoff.

"Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace," the FOMC said Wednesday.

Last week, an advance estimate by the Bureau of Economic Analysis showed that the US economy contracted in the March quarter, representing the first quarterly decline in three years, with analysts expecting tariffs to further slow activity down later in the year.

"In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks," the FOMC said Wednesday, reiterating its stance from March.

The FOMC's next meeting is scheduled for June 17-18.

"The likely and appropriate response from the Fed to the heightened risks to both sides of its dual mandate is that the central bank will be reactive, rather than preemptive," Oxford Economics Chief US Economist Ryan Sweet said in remarks e-mailed to MT Newswires. "The Fed is unlikely to cut interest rates earlier than our forecast of December, unless there are definitive signs that the labor market is deteriorating."