Federal Reserve Vice Chairman Richard Clarida said U.S. monetary policy is “in a good place” amid solid growth while there is a risk that inflation continues to miss the central bank’s 2% target.

The vice chairman said Thursday that the Federal Open Market Committee’s baseline view is that core inflation rises back to the central bank’s 2% target following three interest rate cuts in 2019, which in his view were put in place partly to offset surprisingly strong global disinflationary headwinds.

U.S. central bankers forecast last month that inflation minus food and energy would rise to 2% in 2021. That measure stood at 1.6% in November.

“If there is a risk to that outlook, it is skewed to the downside,” Clarida said in a question and answer period following his opening remarks to the Council on Foreign Relations. “We need to be nimble and we need to be alert not only to U.S. but global circumstances.”

Clarida said monetary policy is “in a good place” and should continue to support sustained growth, a strong labor market, and inflation running close to 2%.

“If developments emerge that, in the future, trigger a material reassessment of our outlook, we will respond accordingly.”

His remarks on downside risks to inflation, however, suggest that the committee is giving that indicator some weight as it assesses the need to change policy in the future.

Clarida suggested the committee wants to give the rate cuts time to work through to inflation expectations and actual prices.

“The global disinflationary pressures which I referred to are very powerful forces and policy needs to factor that in, in setting policy to get inflation up to the objective,” he said in the question and answer period. Even so, “we do think that policy is appropriate, and, under our baseline outlook, will continue to be appropriate.”

Fed officials left interest rates unchanged in a range of 1.5% to 1.75% at their final meeting of 2019. They also signaled policy would be on hold through 2020, keeping the central bank on the sidelines during a U.S. presidential election year.

Investors see almost no chance of a rate cut in the next six months, according to pricing in federal funds futures contracts.

Minutes of the Dec. 10-11 meeting released Jan. 3 showed officials still see some downside risks to their outlook for continued growth and were prepared to move rates up or down if there was a “material” change in their forecasts. “There are some indications that headwinds to global growth may be beginning to abate,” Clarida said.

“The U.S. economy begins the year 2020 in a good place,” he said. “The unemployment rate is at a 50-year low, inflation is close to our 2% objective, gross domestic product growth is solid.”

The release of the minutes last week coincided with news of a U.S. air strike that killed a top Iranian general.

Oil prices rose in anticipation of retaliation by Tehran but have since fallen back, reassured by the restraint shown so far by both sides. President Donald Trump said Wednesday that Iran was “standing down” from the confrontation.

Clarida is leading the Fed’s review of monetary policy strategy, tools and communications policy. In December, Fed officials discussed feedback from their listening sessions with community and business leaders around the country. He said conclusions from the review will be shared with the public “later this year.”