The Federal Reserve keeps interest rates steady Wednesday, continuing a cautious approach as President Donald Trump’s trade war begins to thwart the central bank’s work to bring inflation down.

Central bankers still expect to cut rates two more times this year, as they did a few months ago.

Fed officials now see their preferred measure of inflation ending the year at 2.7%, versus the 2.5% pace anticipated in December. Their target is 2%, and Fed officials so far view the tariffs as only a temporary blow to reaching it in 2027. Fed officials also marked down their outlook for economic growth for this year to 1.7% from the previous 2.1%, with slightly higher unemployment projected by the end of this year.

Here are some views from Wall Street banks.

Whitney Watson, Goldman Sachs global co-head and a co-chief investment officer of fixed income and liquidity solutions said that, as expected, the Fed adopted a cautious tone at this month’s meeting, remaining on hold as it waits for clarity on the growth outlook and changes to trade policy. Revisions to FOMC members’ projections had a somewhat “stagflationary” feel with forecasts for growth and inflation moving in opposite directions. For the time being the Fed is in wait-and-see mode, as it monitors whether the recent growth slowdown develops into something more serious.”

Matthew Luzzetti, chief U.S. economist at Deutsch Bank, said the market was bracing "for a more consistently hawkish message from the Fed, driven by worries about inflation."

One hawkish note was that even though the "median" forecast continues to be for two rate cuts this year, eight Fed officials penciled in one or no cuts this year. That's up from four in December.

But Padhraic Garvey, regional head of research Americas at ING, spoke for many economists when he said that Powell "seemed very relaxed about inflation."

The possibility of a trade war, however, did induce the Fed to downgrade its estimate of U.S. growth in 2025 and pencil in higher inflation.

Scott Anderson, chief U.S. economist at BMO Capital Markets, said Powell might have a tougher test at his next press conference in May. By that point, Powell might be staring at hard data showing higher inflation, softer consumer spending and a weaker labor market.

"I think the data is going to look quite a bit uglier in a few months," Anderson said.