By Michael S. Derby 

Federal Reserve Bank of New York leader John Williams said Tuesday the economy may have already seen the worst of the impact of the coronavirus pandemic, even as significant uncertainty looms.

"Encouraging" data that has arrived as some states begin to reopen "indicate that we've likely seen the low point of the downturn and that the overall economy has begun to recover," Mr. Williams said in remarks before a video meeting held by the Institute of International Finance.

But even as the data moves in a positive direction, "the economic outlook remains highly uncertain and it's going to take considerable time to restore the economy to its full potential," Mr. Williams said. But he added, "I do believe we can get back to a very strong economy."

The central banker, who also serves as vice chairman of the rate-setting Federal Open Market Committee, said the Fed is "committed to using our full range of tools to support the economy and bring about a full and robust recovery."

Mr. Williams said the choices the Fed will make will be determined by how the economy performs, and he offered no specifics about what sort of actions were on the table. But he pushed back at the notion the Fed might push its now near-zero interest-rate target into negative territory, saying guidance about the future direction of rates and asset buying offer more stimulative power.

Mr. Williams also reiterated that the Fed hasn't made any decisions about what's called yield-curve control. That strategy entails the Fed saying bond yields aren't allowed to exceed certain levels and taking action to achieve that goal.

Mr. Williams spoke just ahead of testimony before Congress by Fed Chairman Jerome Powell. In his testimony, Mr. Powell is set to tell legislators "the path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus. A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities."

Mr. Williams echoed that and affirmed that while the central bank and the broader government have taken aggressive action to help buoy the economy and financial markets, what happens in the months and years ahead will be driven by the health-care response to coronavirus-driven illness.

Some Fed officials have offered cautious comments about some areas opening up too soon, as multiple states are already suffering a surge in illness again. Some are already halting or reversing plans to get their local economies back up to speed.

"We are seeing some indications of a slowing in the pace of recovery in states that are currently experiencing large-scale outbreaks," Mr. Williams said. "This is a valuable reminder that the economy's fate is inextricably linked to the path of the virus," he said, adding "a strong economic recovery depends on effective and sustained containment of COVID-19," in reference to the illness caused by the coronavirus.

In his remarks, Mr. Williams said the modest usage so far of the Fed's emergency lending facilities is in fact a good thing. While the existence of these facilities help market participants know there's support in case the markets get in trouble, Mr. Williams said the Fed never intended to displace private credit markets. He added he was heartened by the fact that companies and local governments are able to get their borrowing needs met by the private sector.

Write to Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

June 30, 2020 12:45 ET (16:45 GMT)