SINGAPORE (Reuters) – San Francisco Federal Reserve Bank President Mary Daly said on Monday she was taking a patient approach on interest rates until economic data and trade talks provided more clarity on the U.S. growth outlook.

The Fed, which brought a three-year drive to tighten monetary policy to an end in March, is balancing whether to act on below-target inflation, or to keep its powder dry in case of a future economic downturn.

A bitter trade battle between the United States and China has rattled global financial markets and increased uncertainty for policymakers predicting future growth and prices.

“Right now what we have are trade discussions and those trade discussions are creating more uncertainty in the economy,” Daly said at a symposium on Asian banking and finance in Singapore.

“I think right now patience is exactly the right approach.”

The Fed announced a 2% inflation target in January 2012 but since then inflation has almost always been lower.

This has shaken policymakers. Besides potentially signaling malaise, weak inflation keeps interest rates low and could give the Fed less room to cut rates in the next recession.

Daly said the Fed would consider cutting interest rates if inflation didn’t show signs of recovering.

“If growth fell sharply or if inflation didn’t look like it was going to achieve 2% on a sustainable basis, then of course the idea of neutral rate … bringing it lower is something we want to discuss.”