IMF Managing Director Kristalina Georgieva told Reuters that the Federal Reserve (the US central bank) may cut interest rates again this year, but it will need to carefully balance between slowing growth prospects and signs of a halt in inflation deceleration.

Georgieva noted that the US economy has shown strength and exceeded most expectations with 3.8% growth in the second quarter, and consumer demand remains strong despite indicators showing that employment is not as robust.

She added in an interview on Wednesday, “It is not a completely clear picture… so, in this environment, considering the halt in inflation deceleration and that the economy might also be somewhat weak, it is very important that the Federal Reserve does the right thing.”

The Federal Reserve cut interest rates by a quarter percentage point in its September meeting, a move described by Fed Chair Jerome Powell and others as a way to keep policy tight enough to restrain the economy and exert downward pressure on inflation, while providing more flexibility to guard against rapid labor market weakness.

Georgieva said consumers have not yet felt the full impact of President Donald Trump’s high tariffs because companies had increased their inventories before the tariffs were raised, noting that some companies with large profit margins are absorbing the cost.

She added that Trump’s tariff hikes come after decades of very low tariffs in the US and moves by other countries about a decade ago to reduce their tariffs.

This shift by Trump has transformed the global economy into a truly multipolar one, as many countries now explore opportunities to cooperate with regional partners or sign multilateral agreements with other regions.

She said this new world is likely to persist.

She continued: “I don’t think we will return to the world we had, if you want to call it that, before the COVID-19 pandemic before all these shocks hit us… I see huge potential in places like the Association of Southeast Asian Nations (ASEAN), the Gulf, and some regions in Africa where there are strong economies, to move in this direction towards greater regional integration in trade and financial services, and I think that is a good thing.”