By Michael S. Derby 

Federal Reserve Bank of New York President John Williams echoed the views of many of his colleagues Thursday, saying that after three rate cuts, U.S. central-bank interest-rate policy is in the right place to deal with the current environment of uncertainty.

"The economy is in a good place, and monetary policy is as well," Mr. Williams said in the text of a speech to be presented at a conference at the San Francisco Fed. "My forecast is for moderate GDP growth, the labor market remaining strong, and inflation moving back to our symmetric 2% target," he said

Mr. Williams reserved the right to change his outlook for monetary policy: "Things can change. Data dependency remains our motto, and if there were a material change to this outlook, we would adjust monetary policy in support of our goals of maximum employment and price stability."

Mr. Williams also is vice chairman of the rate-setting Federal Open Market Committee. It met at the end of October and implemented its third rate cut of the year, lowering its federal-funds target-rate range to between 1.50% and 1.75%.

A number of officials -- including Fed Chairman Jerome Powell in congressional testimony this week -- have said that after those rate cuts, the Fed can hold steady for now.

Mr. Williams said of the Fed's rate cuts that "the adjustments to monetary policy we made this year were designed to balance maintaining a strong U.S. economy with slowing global growth, and provide insurance against ongoing and potential future risks."

He said slower global growth and trade uncertainty are being felt in the U.S. factory sector and in business investment.

In his appearance, Mr. Williams said he wasn't worried that even as rates are low the Fed lacks to the tools to provide more stimulus if it deemed it needed. He said the Fed can use its crisis-era tool kit if rates can be lowered no further.

Mr. Williams also weighed in the heavy money market volatility that flared up unexpectedly in September. Since then, the Fed has pumped in substantial amounts of temporary liquidity to eligible banks, and has started growing its balance sheet again, to keep short-term rates in line with central bank goals.

Mr. Williams said the Fed is still working to understand what happened as it builds reserve levels back up in the financial system. "I don't see this as a big financial stability risk, but it's something that needs to be high on our list of things we are working on," he said.

Write to Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

November 14, 2019 16:47 ET (21:47 GMT)

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