San Francisco Fed President John Williams said in a speech on Thursday that the U.S. economic growth remained strong.

"If we look at the domestic market in isolation, it shows strong growth. We're just contending with outside forces," he said.

Williams added that the effect of falling oil prices and a stronger U.S. dollar will dissipate.

San Francisco Fed president expects the inflation in the U.S. to rise toward the 2% target "over the next two years".

He also said that he was not concerned about the slowdown in the Chinese economy.

Williams pointed out that further interest rate hikes will be gradual and will depend on the incoming economic data.