Federal Reserve Bank of San Francisco President Mary Daly is taking a "watch-and-see" stance following the central bank's rate cut last month, she told reporters Aug. 28.
Daly, speaking after an appearance in New Zealand, said she supported the Fed's July 31 decision to cut interest rates for the first time since the financial crisis. Markets believe the Fed will cut rates again in September, but Daly declined to offer specific guidance on what she thinks the Fed's next move should be.
With a few more meetings to go before the end of the year, officials have a chance to look at how its rate cut is affecting the economy and to what extent slower global growth and trade uncertainty continue to weigh on the outlook, she said.
Uncertainty is the "number one thing" businesses seem to be worried about, and some are delaying planned investments until clouds hovering the economy clear up, Daly said. But the consumer sector remains "quite strong," highlighting an August reading of consumer sentiment from the Conference Board.
Asked about the Fed's reduced ammunition on interest rate cuts given that rates are lower than in the past, Daly said she would favor taking earlier action to prevent a slowdown instead of holding off until later.
"I'm convinced from the evidence that using our tools early and preemptively is better than waiting," she said. "It's better to avoid the ditch than trying to dig yourself out of the ditch."
