For all the uncertainty plaguing the U.S. economy, one observation is clear: From job growth to consumer spending, the $30 trillion engine is slowing.

That usually signals it’s time for the Federal Reserve to cut interest rates. And Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, posited two such moves before the end of the year in a Wednesday TV interview.

But there’s a big caveat to Kashkari’s call: The central bank might have to reverse course and raise rates. That’s if President Donald Trump’s global tariffs — which on Thursday hit about 90 countries with import taxes as high as 50% — push inflation back up again.

“I would love to not have to do that,” Kashkari said on CNBC from the Aspen Economic Strategy Group forum. “But I’m realizing that these tariff effects are going to take a lot longer to really become clear, and if virtually all the other economic data is pointing to a cooling economy and a slowing economy, how long can we wait until the tariff effects become clear? That’s just weighing on me right now.”

Interest rates are the Fed’s main tool for speeding up or slowing down the economy, with the goal to keep prices stable and unemployment low. When inflation is high, the central bank raises rates to slow spending and tame prices; when unemployment is high, it lowers rates to kick the economy back into gear.

Trump has put increasing pressure on the central bank to cut rates, often taking direct aim at Fed Chairman Jerome Powell.

After raising rates to a 22-year high in 2023, the Fed started making cuts late last year with the pandemic shock fading. But it has been in wait-and-see mode since Trump took office in January. Though inflation has fallen from post-pandemic levels, it’s still above the Fed’s 2% target. Economists expect tariffs could push inflation higher, as companies pass the import taxes on to consumers.

It could take more than a year for the effect of tariffs on the economy to become clear, Kashkari said. Meanwhile, a slew of economic data last week — including downward revisions to the May and June jobs numbers that prompted Trump to fire the head of the agency producing them — suggested the economy is already weakening.

“Right now, the economy is slowing,” Kashkari said, “and I think that we’re going to have to respond to that.”

©2025 The Minnesota Star Tribune. Visit at startribune.com. Distributed by Tribune Content Agency, LLC.