A member of the U.S. central bank's monetary policy committee told CNBC he believed global developments are preventing the world's largest economy from returning to normalized interest rates.



John Williams, President & CEO of the Federal Reserve Bank of San Francisco, told CNBC on Monday that the U.S. economy was doing "quite well," pointing to stable inflation and strong employment growth.

"The real issue is the global financial and economic developments, there's uncertainty about what's happening around the world and how that feeds back to the dollar and the U.S. economy," he told 'Asia Squawk Box.'

Williams serves on the Federal Open Market Committee but is not one of the voting members.

He reiterated that the central bank's policy decisions would remain data dependent, singling out inflation as one of the Fed's top concerns.

"We've been missing our 2 percent inflation goal for three and a half years or so, global disinflationary factors are still holding inflation down...The data to me isn't so much about the labor market continuing to improve, I'm very positive on that, it's more about inflation moving back to 2 percent in the context of very strong headwinds," he explained, citing the strong dollar and low commodity prices.

"We have a domestic mandate...but that said, we understand that we're in a global economy so what happens in Brazil or China has a huge impact on the U.S. in terms of our inflation and employment goals."

Unlike in Europe and Japan however, slow inflation won't push the Fed to introduce a negative interest rate policy (NIRP), Williams noted, adding that the U.S. has other policy tools at its disposal, including quantitative easing and forward guidance.

"We're in a very different situation where we''ll be raising interest rates over the next few years and we're in much stronger economic position [than Europe or Japan] so it's not a tool that I see us using."