Atlanta Fed President Raphael Bostic said Friday the central bank might have to cut interest rates if consumer spending suffers as a result of the new round of tariffs placed on Chinese goods overnight.

Consumers did not feel much pain from President Donald Trump’s earlier decisions to slap tariff increases on foreign goods, but that might change with this new round, Bostic said.

“The consumer has not really seen the full effect of any of the tariffs to date,” Bostic said, during a talk with business leaders in Meridian, Mississippi.

“The first round of tariffs... most businesses, that we talked to, said ‘we did not pass through most of that elevated costs through to the final customer,’” he said.

But as tariffs get applied to a broader set of goods and the degree of the tariff goes up, businesses have told Fed staffers that “it is harder to forbear” from passing along prices to consumers, he said.

“I don’t know how it will turn out,” Bostic said.

Bostic said the Fed would watch carefully to see what firms decided to do. And if consumers see higher prices, households may have to pull back.

Asked if the Fed might have to cut rates as a result, Bostic said it could.

The Trump administration raised tariffs to 25% on $200 billion in Chinese imports early Friday. President Donald Trump said the bilateral negotiations were continuing.

Read: Trump Today: President says ‘not need to rush’ China talks

“We [at the Fed] just have to be nimble, we have to be ready, we have to be alert and we have to be smart in a quick way to try to understand” what changes are occurring in underlying economic conditions, Bostic said.

It was notable that recent Fed studies have found that middle-class consumers can’t afford even a $400 surprise, he said.

Bostic has also said the tariffs might spur inflation, suggesting interest rates might have to move higher.

“I actually think we’re almost at the cusp where we’re going to see prices move,” Bostic said, in a separate talk with business leaders in New Orleans on Thursday, according to Reuters.