NEW YORK, March 6 (Xinhua) -- The United States will see its annual economic growth decline to about 2 percent this year and slower growth is just a "new normal," New York Fed President John Williams said on Wednesday.
A downturn in global growth, heightened geopolitical uncertainty and the effects of tighter financial conditions are the three constraining factors that will contribute to the slower pace this year, the central bank official said in a speech to the Economic Club of New York.
Meanwhile, the positive tailwinds including synchronized global growth, fiscal stimulus and favorable financial conditions that drove U.S. GDP growth last year to above 3 percent have calmed down this year, he said.
However, "slower growth isn't necessarily cause for alarm. Instead, it's the 'new normal' we should expect," said Williams in prepared remarks.
He added that slower growth should not come as a surprise because economic fundamentals have pointed to GDP growth much lower than that in the 1990s for a long time.
Williams noted that while the base case outlook is good for now, various uncertainties continue to loom large.
Given the circumstances, the central bank can afford to be flexible and wait for the data to guide its approach to interest rate hikes, he said.
Several central bank officials including Fed Chairman Jerome Powell reiterated Fed's stance on interest rate hikes last week. The Federal Open Market Committee, a committee within the Federal Reserve System, decided to keep interest rates where they were at the most recent meeting, and noted the importance of patience in determining future policy actions.