The Federal Reserve kept interest rates at the target range of 4.25% to 4.5% at the conclusion of its May meeting. The policy-setting Federal Open Market Committee noted that "the risks of higher unemployment and higher inflation have risen." The central bank is walking a fine line: It's facing uncertainty around President Donald Trump's tariffs and economy that shows some signs of resilience – take April's payrolls – as well as weakness – like the latest gross domestic product report.

Fed Chair Jerome Powell knocked down any notion of taking preemptive rate cuts as inflation is still running above target. "It's not a situation where we can be preemptive, because we actually don't know what the right responses to the data will be until we see more data," Powell said. The Fed has been on hold since its last cut in December as it waits to evaluate the tariff impact.