New York Federal Reserve President John Williams told CNBC on Friday the central bank is listening “very carefully” to the market’s concerns on growth, but believes the U.S. economy is in good shape.
Federal Reserve Chairman Jerome Powell and other central bank leaders are moving to more data dependency, Williams said, which includes listening to people in financial markets as well as local businesses.
“We are listening very carefully to what’s happening in markets for two reasons. One is financial conditions have important influence on economic outlook,” Williams said on “Squawk on the Street” in an interview with CNBC’s Steve Liesman. “Second, I think we are hearing something important from markets, and that is a concern risk to the economy and potential further slowdown than we currently expect in our base case.”
It’s not just looking at the “hard GDP data” or “CPI data,” he added. “We’re listening to the message of the market.”
Williams joined CNBC after the Fed on Wednesday raised its benchmark interest rate for a fourth time this year and lowered its rate hike projection for 2019 from three to two.
In the interview, Williams said Wednesday’s rate hike was “fully justified and makes sense,” but he added the Fed is open to reconsidering its views on rate hikes next year. Stocks rose Friday on his comments.
Powell did leave the door open to other options next year. He emphasized “data dependency” on Wednesday and said if data does not hold up in 2019, the Fed may change course.
Stocks sank Wednesday and Thursday following the Fed’s decision Wednesday’s, pushing the Dow Jones Industrial Average and S&P 500 further into correction territory. However, U.S stocks opened Friday’s session slightly higher.
Earlier this month, Williams, a voting member and vice chairman of the policymaking Federal Open Market Committee, said he expects the Fed to continue raising rates “over the next year or so,” even while it pays close attention to possible risks highlighted by financial markets.
He also expects solid growth of around 3 percent this year and somewhat slower next year.
“The community continues to monitor global economic and financial markets develops and their potential economic impact,” he added, stressing the Fed is very focused on its monitoring efforts.
–CNBC’s Kate Rooney contributed to this report.
