Months of above-trend payroll growth were outpacing a slower U.S. economy, making March’s weak number less alarming, New York Federal Reserve President William Dudley said Wednesday.

Speaking just a few days after the most recent nonfarm payrolls report showed a huge drop to just 126,000 new positions, the high-ranking central bank official said markets shouldn’t be too alarmed by that single report. He said the average 269,000 gain in monthly payrolls over the past year was “a little off” when compared to the tepid economic growth.

In fact, a general weakening in the economy during the first quarter could push the Fed back on its liftoff date for the first interest rate hike in nine years. Wall Street had been looking for a June move, but those expectations have changed.

“Clearly the economy is growing slower and there’s less pressure on the labor market,” Dudley said during an event presented by Thomson Reuters. “Inflation is still below the Fed’s 2 percent objective. It would be reasonable to expect that the timing of the Fed’s first rate hike might be a little further off in time.”

He did make room for a June hike, presuming that data on housing and inflation improve, but said the weak first quarter has created “a bigger hurdle” for that to happen.

Once the Fed does begin to tighten, the pace afterward will depend largely on market reaction, he said.

During the Fed’s historically aggressive easing, which began in late 2008 when the target funds rate went to zero and has included an expansion of the central bank’s balance sheet to $4.5 trillion, the S&P 500 has surged more than 200 percent while bond yields have stayed low.

Dudley said financial markets are an important “transmission mechanism” for the effectiveness of Fed policy.

“If financial conditions tighten a lot, then presumably we’re going to slow down or we’re going to pause for a while,” he said. “Conversely, if the market doesn’t react at all—stock market goes up, bond market doesn’t move—presumably we’re going to want do do more (tightening).”