U.S. applications for unemployment benefits fell to their lowest level in more than three years last week, potentially complicating the Federal Reserve’s upcoming decision on interest rates.

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 higher unemployment and higher inflation have risen.

US Fed Chair Jerome Powell says the Trump administration’s expansive new tariffs will likely lead to higher inflation and slower growth.

A Minnesota farmer worries about the price of fertilizer.

With inflation still elevated, Federal Reserve officials expressed caution at their last meeting about cutting interest rates too quickly, adding to uncertainty about their next moves.

After reaching 40-year highs over the summer, price increases in the U.S. are now steadily easing.

The Federal Reserve says the economy was growing at a modest pace at the end of 2021 but was still being held back by ongoing supply-chain disruptions and labor shortages.

Growth in the services sector, where most Americans work, slowed in August after setting a record pace in July.

U.S. consumer prices were unchanged in October, the lowest reading in five months and an indication that the price spike seen this summer is beginning to fade as coronavirus cases start to increase. (AP Photo/Rogelio V. Solis)WASHINGTON – U.S. consumer prices rose 0.3% in January, led by a surge in energy. But even though the gain was the biggest monthly increase since July, inflation gains over the past year have remained modest. Core inflation, which excludes volatile food and energy costs, is also up 1.4% with core prices unchanged in January. “Consumer price inflation remains very tame,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, predicting that the upcoming rise in year-over-year inflation figures should be transitory.

A sales associate helps customers as they consider the purchase of a big-screen television at a Costco warehouse on Wednesday, Nov. 18, 2020, in Sheridan, Colo. U.S. consumer confidence fell to a reading of 96.1 in November as rising coronavirus cases pushed Americans confidence down to the lowest level since August. (AP Photo/David Zalubowski)WASHINGTON – U.S. consumer confidence rose in January as Americans became more optimistic about the future. The Conference Board reported Tuesday that its consumer confidence index increased to 89.3, a rebound from December when it dipped to 87.1. The present situation index weakened further, however, reflecting concerns over the resurgence of COVID-19. “The slow rollout of the vaccines and the still raging pandemic continue to depress consumer confidence despite the prospect of further fiscal aid and a brighter and a brighter health situation,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.