Washington (CNN) — America’s central bankers continue to deal with the double whammy of potentially higher inflation and a slowing labor market, Federal Reserve Chair Jerome Powell said Tuesday, calling it a “challenging situation” for Fed policymakers.

But, for now, interest rates are in a good place to deal with either threat, Powell said, suggesting he sees no urgency to lower rates aggressively.

“The increased downside risks to employment have shifted the balance of risks to achieving our goals,” Powell said at an economics event in Warwick, Rhode Island. “This policy stance, which I see as still modestly restrictive, leaves us well positioned to respond to potential economic developments.”

The Fed chief characterized the idea that tariff inflation may be a one-off as a “reasonable

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