Federal Reserve Bank of San Francisco President John Williamsplayed down a “low” reading on second-quarter U.S. growth and saidthe economy could still warrant as many as two interest rateincreases this year—or none.

“There's definitely a data stream that could come through in thenext couple of months that I think would be supportive of two rateincreases,” Williams told reporters Friday after speaking inCambridge, Massachusetts. “There's data that we could get thatwouldn't be supportive of that—it could be one, maybe, or none.Time will tell.”

The U.S. Commerce Department reported earlier Friday thatthe economy expanded at a 1.2 percent annualized pace, less thanhalf the advance projected by economists in a Bloomberg survey.

Dallas Fed President Rob Kaplan, who also spoke Friday, echoedWilliams' wait-and-see attitude, saying he wouldn't “overreact toone data point,” particularly because the report showed consumerspending continued to be strong.

“We're still hopeful for solid GDP growth this year, and thebasis for that is the consumer,” Kaplan told reporters at an eventin Albuquerque, New Mexico,

The pair were the first Fed officials to speak publicly sincepolicy makers held interest rates steady on Wednesday for the fifthstraight meeting. The Fed was slightly more upbeat about the U.S.economy in a statement released after its two-day gathering, takinga step toward an increase later this year without signalinghow soon a move might come.

Chair Janet Yellen and her colleagues have been watching forevidence of how headwinds from abroad, including fallout overBritain'sdecision to leave the European Union, will affect U.S. hiringand progress in lifting inflation toward their goal of 2percent.

“The GDP number for the second quarter was low,” said Williams,who isn't a voting member of the policy-setting Federal Open MarketCommittee (FOMC) this year. “Final sales actually looked prettygood,” though, and “a lot of the second-quarter weakness, part ofit was really inventory swings.”

Williams also said inflation data were “more or less what I hadbeen expecting,” while the effects on the U.S. economy from the Brexit vote appeared to be“very modest.”

Can't 'Force It'

Kaplan, who doesn't vote on the FOMC until 2017, said the Fedshould be looking for opportunities to raise rates, “but you can'tforce it.”

“What I'm looking for is continuing improvement and forwardmomentum in GDP,” he said. “A number like this makes you want tosee more information.”

Investors apparently agreed. The odds of a September rate hike,as implied by pricing in federal funds futures contracts, droppedto 20 percent from 28 percent on Thursday.

The U.S. central bank has been on hold since it raised itstarget for the fed funds rates by a quarter-point in December to0.25 percent to 0.5 percent, ending seven years of near-zero rates.Its most recent forecasts, released in June, showed that the medianestimate of policy makers was for two more quarter-point rateincreases this year, though six of the 17 officials submittingprojections saw only one move.

“It makes sense to continue on the process of the gradualremoval of accommodation—my personal view is it makes sense,assuming the data will support that, to raise rates again thisyear, but it is data-dependent,” Williams said. “We'll get a couplemore employment reports, more data on inflation before our nextmeeting.”

The FOMC next meets Sept. 20-21. Yellen will have an opportunityto air her views on the economy's progress when she speaks on Aug.26 at the Kansas City Fed's annual policy symposium in JacksonHole, Wyoming.

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