A rise in U.S. tariffs on imports from the EU that was met with retaliation would weaken economic growth in the eurozone and push inflation higher, Christine Lagarde warned.

The projections underscore the tight spot the Fed may find itself in this year: Higher inflation typically would lead the Fed to keep its key rate elevated, or even raise rates. On the other hand, slower growth and higher unemployment would often cause the Fed to cut rates to spur more borrowing and spending and lift the economy.

Jerome Powell, the Fed chair, said that “further progress may be delayed” on inflation because of tariffs. Officials kept interest rates steady but signaled they may cut them twice this year.