NY Fed President John Williams says the Fed could reevaluate view in 2019

Federal Reserve Bank of New York President John Williams made the comments to Steve Liesman on CNBC's "Squawk on the Street" Friday.

Earlier this week, the Federal Reserve hiked its target range for benchmark interest rates to 2.25 percent to 2.5 percent. Central bank officials also forecast two hikes next year, down from three rate raises previously projected.

Fed Chairman Jerome Powell's 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.

Markets stumbled up and down after the decision Wednesday, then ultimately turned negative during Powell's news conference. Major equity indexes have moved into correction territory and are mostly negative for the year.

Investors were also focused on Powell's comments that the balance sheet reduction program is going well, and will proceed as planned. Right now, the Fed is allowing $50 billion a month to run off the balance sheet, which is mostly a portfolio of bonds the central bank purchased to stimulate the economy during and after the financial crisis.

"The fed wants to shrink that balance sheet, they know it's big, it hamstrings them in the next downturn," Peter Boockvar, chief investment officer at Bleakley Advisory Group, told CNBC. "The market knows it's a steady drip liquidity drain every month."

The Fed is also dealing with repeatedly criticism from President Donald Trump. On Monday, Trump said "it is incredible" that "the Fed is even considering yet another interest rate hike."

— This is developing news. Please check back for updates.

— CNBC's Jeff Cox and Patti Domm contributed to this report.

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