This photo combo shows, from left, Federal Reserve Board of Governors member Christopher Waller on May 23, 2022, in Washington and Michelle Bowman, Vice Chair for Supervision of the Federal Reserve Board of Governors on June 25 in Washington. (AP Photo/File)

WASHINGTON (AP) — The Federal Reserve left its key short-term interest rate unchanged for the fifth time this year, brushing off repeated calls from President Donald Trump for a cut.

The Fed’s decision Wednesday leaves its key short-term rate at about 4.3%, where it has stood after the central bank made three cuts last year. During a news conference, Chair Jerome Powell said that Trump’s sweeping tariffs are starting to push up inflation and it will take time for the Fed to determine whether the uptick in prices will be a one-time effect or something more persistent.

“That is a risk to be assessed and managed,” he told reporters.

There were some signs of splits in the Fed’s ranks: Governors Christopher Waller and Michelle Bowman voted to reduce borrowing costs, while nine officials, including Powell, favored standing pat. It is the first time in more than three decades that two of the seven Washington-based governors have dissented. One official, Governor Adriana Kugler, was absent and didn’t vote.

The choice to hold off on a rate cut will almost certainly result in further conflict between the Fed and White House, as Trump has repeatedly demanded that the central bank reduce borrowing costs as part of his effort to assert control over one of the few remaining independent federal agencies.

Powell said that while tariffs are starting to push up the cost of goods — and he expects more of that to happen in the coming months — the price of services — rents, insurance, and hotel rooms — has continued to cool.

He suggested it could take some time to determine whether the impact of the tariffs will be short-lived or more persistent.

“We think we have a long way to go to really understand exactly how” the tariffs and prices will play out, Powell said.

Many economists and Wall Street investors have expected the Fed to cut its rate at its next meeting in September, but Powell’s remarks suggest there may not be enough data before September to support a cut.

“We have made no decisions about September,” Powell said. The chair acknowledged that if the Fed cut its rate too soon, inflation could move higher, and if it cut too late, then the job market could suffer.

Major U.S. indexes, which had been trading slightly higher Wednesday, went negative after Powell’s comments.

“The markets seem to think that Powell pushed back on a September rate cut,” said Lauren Goodwin, chief market strategist at New York Life Investments.

Powell also underscored that the vast majority of the committee agreed with a basic framework: Infation is still above the Fed’s target of 2%, while the job market is still mostly healthy, so the Fed should keep rates elevated.

Earlier Wednesday, the government said the economy expanded at a healthy 3% annual rate in the second quarter, though that figure followed a negative reading for the first three months of the year, when the economy shrank 0.5% at an annual rate. Most economists averaged the two figures to get a growth rate of about 1.2% for the first half of this year.

Waller also said earlier this month that he favored cutting rates, but for very different reasons than Trump has cited: Waller thinks that growth and hiring are slowing, and that the Fed should reduce borrowing costs to forestall a weaker economy and a rise in unemployment.