The President of the Richmond FED says it is still unclear when the Central Bank should reduce the rates. “It is very difficult to drive when it is foggy”

A maximum official of the Federal Reserve said on Friday that the mass uncertainty created by President Donald Trump’s tariffs has caused some companies to cut out hiring and spending, threatening –Lenca the economyHe added that it is not yet clear if the central bank should reduce its key interest rate.

Tom Barkin, president of the Richmond branch of the Federal Reserve, said that companies have become cautious, though they are not yet participatingStrong work cutsor other behavior typical of a recession.

“The way I described it is, it is very difficult to drive when it is foggy,” Barkin said in observations in Loudoun County, the Virginia Chamber of Commerce. “This is what I see in the business. Hiring freezes, discretionary spending is cut, but not important layoffs.”

Barkin and other Fed speakers on Friday emphasized the difficult challenge that the Central Bank has right now. If the rates increase inflation, the Fed would maintain high rates or increase them more. But if homework worsening the economy, the Fed would usually reduce rates.

On Wednesday, President Jerome Powell he said The highest risks of inflation and the highest unemployment are increasing and the Fed would expect greater clarity over where the economy is heading before taking its next step. Powell spoke after the Fed maintained its key rate for the third consecutive meeting.

Trump, however, has continued to assault PowellNo cutting ratesthat over time could reduce loans costs for consumers and companies.

Trump presses the type cuts because he argues that the economy no longer suffers from the high inflation that the Fed led to increasing debt costs by 2022 and 2023.

But the most likely reason for the FED to reduce their key rate in the coming months, according to economists, would be to compensate for a strong slowdown in the economy derived from the rates. As companies see that their costs increase due to higher duties, about half of imports are parts used by North -American companies, they could instituting widespread layoffs, driving unemployment and risking recession.

Gregory Daco, chief economist EyerA consulting company said that the Fed should reduce rates soon because “the economy slows down and will continue to slow down and flirt with the recession.”

A key challenge for the Fed right now, however, is to determine the greatest risk for economics, inflation or unemployment.

Barkin said it was too early to say that minor loan costs are needed to increase growth.

“We have risks on the side of inflation and if you see how I see that we have risks to unemployment, then declaring that one risk is more significant than the other, right now it is almost like guessing,” said Barkin.

Barkin is one of the 19 officials participating in the eight Fed meetings to decide on interest rate policy. Only 12 of these members vote the decision. Barkin is not one of the voters this year.

Other Fed officials on Friday echoed Barkin’s wise message.

Michael Barr, a member of the Washington Fed Governing Council, said that the rates could increase inflation for an extended period, leaving the Fed probably. This contrasts with some economists, who think that homework will only increase prices temporarily.

“The highest rates could lead to interruptions in the world supply chains and create persistent rising pressure on inflation,” Barr said in written observations given on Friday at the conference in Reykjavik, Iceland.

Barkin, however, seemed to have a different view on inflation in his observations. He suggested that consumers with cash could be reluctant to pay higher prices for a long time, which could force manufacturers and retailers to eat the additional costs of rates.

“This means that it is good to say that you will happen, but it is not so easy to go,” as you could think, “said Barkin.

This story originally presented to Fortune.com

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