Federal Reserve officials left interest rates unchanged and signaled that they were wary about how stubborn inflation was proving, paving the way for a longer period of high borrowing costs.

The Fed held rates steady at 5.3% Wednesday, leaving them at a more than two-decade high, where they have been set since July. Central bankers reiterated that they needed “greater confidence” that inflation was coming down before reducing them.

“Readings on inflation have come in above expectations,” Jerome Powell, the Fed chair, said at a news conference after the release of the central bank’s rate decision.

The Fed stands at a complicated economic juncture. After months of rapid cooling, inflation has proved surprisingly sticky in early 2024. The Fed’s preferred inflation index has made little progress since December, and although it is down sharply from its 7.1% high in 2022, its current 2.7% is still well above the Fed’s 2% goal. That calls into question how soon and how much officials will be able to lower interest rates.

“What we’ve said is that we need to be more confident” that inflation is coming down sufficiently and sustainably before cutting rates, Powell said. “It appears that it’s going to take longer for us to reach that point of confidence.”

The Fed raised interest rates quickly between early 2022 and the summer of 2023, hoping to slow the economy by tamping down demand, which would in turn help to wrestle inflation under control. Higher Fed rates trickle through financial markets to push up mortgage, credit card and business loan rates, which can cool both consumption and company expansions over time.

But Fed policymakers stopped raising rates last year because inflation had begun to come down and the economy appeared to be cooling, making them confident that they had done enough. They have held rates steady for six straight meetings, and as recently as March, they had expected to make three interest rate cuts in 2024. Now, though, inflation’s recent staying power has made that look less likely.

Many economists have begun to push back their expectations for when rate reductions will begin, and investors now expect only one or two this year. Odds that the Fed will not cut rates at all this year have increased notably over the past month.

Powell made it clear Wednesday that officials still thought that their next policy move was likely to be a rate cut and said that a rate increase was “unlikely.” But he demurred when asked whether three reductions were likely in 2024.

He laid out pathways in which the Fed would — or would not — cut rates. He said that if inflation came down or the labor market weakened, borrowing costs could come down.

On the other hand, “if we did have a path where inflation proves more persistent than expected, and where the labor market remains strong, but inflation is moving sideways and we’re not gaining greater confidence, well, that could be a case in which it could be appropriate to hold off on rate cuts,” Powell said.

Investors responded favorably to Powell’s news conference, likely because he suggested that the bar for raising rates was high and that rates could come down in multiple scenarios. Stocks rose and bond yields fell as Powell spoke.

“The big surprise was how reluctant Powell was to talk about rate hikes,” said Michael Feroli, chief U.S. economist at J.P. Morgan. “He really seemed to say that the options are cutting or not cutting.”

Still, a longer period of high Fed rates will be felt from Wall Street to Main Street. Key stock indexes fell in April as investors came around to the idea that borrowing costs could remain high for longer, and mortgage rates have crept back above 7%, making home buying pricier for many want-to-be owners.

Fed officials are planning to keep rates high for a reason: They want to be sure to stamp out inflation fully to prevent quickly rising prices from becoming a more permanent part of America’s economy.

Policymakers are closely watching how inflation data shapes up as they try to figure out their next steps. Economists still expect that price increases will start to slow down again in the months to come, in particular as rent increases fade from key price measures.

“My expectation is that we will, over the course of this year, see inflation move back down,” Powell said Wednesday. But he added that “my confidence in that is lower than it was because of the data that we’ve seen.”

As the Fed tries to assess the outlook, officials are likely to also keep an eye on momentum in the broader economy. Economists generally think that when the economy is hot — when companies are hiring a lot, consumers are spending and growth is rapid — prices tend to increase more quickly.

Growth and hiring have not slowed down as much as one might have expected given today’s high interest rates. A key measure of wages climbed more rapidly than expected this week, and economists are now closely watching a jobs report scheduled for release Friday for any hint that hiring remains robust.

But so far, policymakers have generally been comfortable with the economy’s resilience.

That is partly because growth has been driven by improving economic supply: Employers have been hiring as the labor pool grows, for instance, in part because immigration has been rapid.

Beyond that, there are hints that the economy is beginning to cool around the edges. Overall economic growth slowed in the first quarter, though that pullback came from big shifts in business inventories and international trade, which often swing wildly from one quarter to the next. Small-business confidence is low. Job openings have come down substantially.

Powell said Wednesday that he thought higher borrowing costs were weighing on the economy.

“We believe that our policy stance is in a good place and is appropriate to the current situation — we believe it’s restrictive,” Powell said.

As the Fed waits to make interest rate cuts, some economists have begun to warn that the central bank’s adjustments could collide with the political calendar.

Donald Trump, the former president and presumptive Republican nominee, has already suggested that interest rate cuts this year would be a political move meant to help President Joe Biden’s reelection bid by pumping up the economy. Some economists think that cutting in the weeks leading up to the election — either in September or November — could put the Fed in an uncomfortable position, drawing further ire and potentially making the institution look political.

The Fed is independent of the White House, and its officials have repeatedly said that they will not take politics into account when setting interest rates, but will rather be guided by the data.

Powell reiterated Wednesday that the Fed did not and would not take into account political considerations in timing its rate moves.

“If you go down that road, where do you stop? So we’re not on that road,” Powell said. “It just isn’t part of our thinking.”