San Francisco Fed President John Williams said in a speech on Friday that the Fed's decision to hike its interest rate in December was right, adding that the further interest rate hikes should be gradual.

"The Fed has started the process of raising interest rates, but the path to normal will be gradual and rates are likely to be low by historical standards," he said.

Williams noted that the U.S. economy is good.

"We're very close to full employment, and the economy still has a good head of steam. Consumer spending continues to increase at a solid pace, auto sales have matched their highs of the early 2000s, and strong fundamentals point to continued strength going forward," San Francisco Fed president said.