The Federal Reserve is likely to keep interest rates on hold in the near term following another inflation reading that didn't make things any easier for the central bank.

A new look at the Consumer Price Index (CPI) for April showed that prices remained sticky despite some signs of cooling, adding to the uncertainty surrounding the inflation outlook.

Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, said the report didn't appear to capture the full impact of President Trump's tariffs yet.

That "doesn’t mean tariffs aren't impacting the economy, it just means they aren't showing up in the data yet," she said.

"Wait-and-see is still the name of the game, and until that changes, the Fed will remain on the sidelines."

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So-called core CPI inflation, which excludes volatile food and energy prices, increased 2.8% over the prior year in April, holding at that level for the second month in a row and in line with expectations. The Fed prefers to look at the core reading, and its goal is to get inflation down to 2%.

Core prices in April also climbed 0.2% over the prior month. That was ahead of March's 0.1% rise, although lighter than anticipated.

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Investors did not change their bets that the Federal Reserve will stay cautious on any near-term rate cuts. They still expect a first cut in September, following holds at meetings in June and July.

Many central bank policymakers have been warning about higher inflation, elevated unemployment, and slower economic growth this year due to tariffs.

Fed officials said at their policy meeting last week that uncertainty about the economic outlook has "increased further" and that "risks of higher unemployment and inflation have risen."

Fed Chair Jerome Powell also reiterated at a Wednesday press conference that he would wait for greater clarity on the impact of Trump's tariffs before deciding on a path for monetary policy going forward.

Those predictions highlight the dilemma for the central bank as it tries to weigh both sides of its mandate — stable prices and maximum employment — at a time when the true effects of White House trade policies on the economy are still unknown.

The outlook for inflation will depend on what the effective tariff rate ends up being and how much gets passed on to consumers in final prices. The US and China on Monday agreed to a 90-day trade truce, with both sides agreeing to slash tariffs in the interim.