WASHINGTON (Reuters) -Federal Reserve policymakers are leaving interest rates where they are while they try to assess how U.S. President Donald Trump's sweeping tariffs and ongoing trade negotiations will affect prices and the economy.

So far, the hard data is giving them little to go on.

"We're still kind of holding our breath," Chicago Fed President Austan Goolsbee said on Wednesday on NPR's Morning Edition radio show. "We've got a bunch of noise that we're trying to figure out the through line."

A case in point: on Tuesday a widely-watched measure of inflation showed consumer prices rose a less-than-expected 2.3% in April, the smallest annual increase in four years.

The tame reading owed mostly to a decline in food prices. Excluding food and energy prices, which can be volatile from month to month, underlying "core" inflation was 2.8%, the same as in March and too hot to be consistent with the Fed's 2% inflation goal.

"We continue to get these numbers that at least suggest that it's going okay," said Goolsbee, a current voter on the Fed committee that sets interest rates. "It's just, I think, not realistic to expect businesses or central banks to be jumping to conclusions about long-term things when you've got so much short-term variability. That's just a very difficult environment."

The Fed has held short-term borrowing costs in the 4.25%-4.50% range at each of its three meetings so far this year, and last week Fed Chair Jerome Powell signaled there is no rush to change that.

Policymakers speaking this week echoed that sentiment.

"We have ourselves in a good position to respond to whatever comes right now," San Francisco Fed President Mary Daly told the California Bankers Association on Wednesday. "Patience is the word of the day."

The Trump administration has driven import levies to record heights only to postpone or suspend the most aggressive actions. It has exempted some goods like electronics even as it looks into subjecting additional sectors like pharmaceuticals to fresh import levies.

The back and forth has left the Fed struggling to determine the ultimate impact on inflation, growth and employment.

Traveling across the western states in recent weeks, Daly says she hears plenty of worries from businesses and households, but sees little sign in the data they have pulled back on spending or investment as a result.

"If you're in a highly tourism-driven state like Nevada and especially Las Vegas, you're getting nervous because international tourism might be coming down; you're worried about the domestic durability when consumers get a little pinched," she said.

In other states like Utah and Alaska there is still a pipeline of activity that businesses and banks feel they can count on, she said.

Overall, Daly said, "we've got solid growth, a solid labor market and declining inflation."

"People feel like the economy is doing fairly well, and it's just a matter of resolving the uncertainty so we can continue to do very well," Daly said.

Speaking earlier on Wednesday at an event in New York, Fed Vice Chair Philip Jefferson also called the labor market solid and said he felt the slight contraction in U.S. economic output over the first three months of the year was distorted by import data that overstated the degree to which the economy was slowing.

Still, Jefferson said, sentiment among businesses and households has declined, and he was "watching very carefully for signs of weakening economic activity in hard data."

At the same time, he said, inflation is likely to firm, but for how long is unclear.

"If the increases in tariffs announced so far are sustained, they are likely to interrupt progress on disinflation and generate at least a temporary rise in inflation," he said. "Whether tariffs create persistent upward pressure on inflation will depend on how trade policy is implemented, the pass-through to consumer prices, the reaction of supply chains, and the performance of the economy."

Financial markets are currently betting the data will give the Fed the clarity it needs by September, at which point the central bank will deliver the first of a couple of rate cuts by year's end.

(Reporting by Howard Schneider and Ann Saphir; Editing by Alex Richardson, Clarence Fernandez and Chris Reese)

By Howard Schneider and Ann Saphir