Interest rate policy is right where it should be considering the current state of the U.S. economy, though that could change if conditions weaken, Federal Reserve Vice Chairman Richard Clarida said Thursday.

Clarida gave generally high marks to the U.S. economy and he reiterated the Fed's broader position that it will base policy on data as it unfolds.

He did, however, outline the conditions under which he might consider cutting rates, which the market is expecting and President Donald Trump is demanding.

"If the incoming data were to show a persistent shortfall in inflation below our 2 percent objective or were it to indicate that global economic and financial developments present a material downside risk to our baseline outlook, then these are developments that the [Federal Open Market Committee] would take into account in assessing the appropriate stance for monetary policy," Clarida said during a speech at the Economic Club of New York.

As things stand, he indicated policy is appropriate as unemployment remains low, inflation is around the Fed's 2% target and rates are near where the central bank considers neutral, or neither restrictive nor stimulative.

"Midway through the second quarter of 2019, the U.S. economy is in a good place," the central bank official said. "By most estimates, fiscal policy played an important role in boosting growth in 2018, and I expect that fiscal policies will continue to support growth in 2019."

The Fed's benchmark funds rate, which banks charge to each other for overnight lending and which forms a basis for most consumer rates, is targeted between 2.25% and 2.5%. That's right where the current economic variables suggest it should be, Clarida said.

Markets differ with the assessment — futures trading, which can be volatile, is currently pricing in two rate cuts by January. Fed officials, by contrast, say they are content with taking a "patient" approach, and they have forecast no moves in either direction at least through the end of 2019.

Recent signs are showing that the economy is slowing after GDP rose 3.1% in the first quarter. Worries are mounting that the U.S.-China trade war will have an impact on investment and demand, though the issue seemed to receive little attention at the most recent Fed meeting.

According to minutes released last week, central bank officials said they see rates remaining unchanged "for some time" amid an economy that continues to grow but with tame inflation.