Given current circumstances, very accommodative monetary policy is “essential,” Federal Reserve Bank of San Francisco president and chief executive John C. Williams said Wednesday.

With spending down and inflation contained, “it’s essential that we keep strong monetary stimulus in place,” Williams told a SPUR Business Breakfast, according to prepared text of his remarks released by the Fed. He made similar comments to the University of San Diego School of Business Administration on Tuesday.

“I should emphasize that our unusually stimulative monetary policy won’t last forever,” he said. “Eventually, as recovery picks up, we will trim our securities holdings and raise our interest rate target.”

The Federal Open Market Committee has planned an exit “in detail,” though “that time is still well off in the future.”

Calling both the situation and the Fed’s response “extraordinary,” Williams said of the FOMC: “We’re not miracle workers. Lower interest rates alone can’t instantly put the economy right. But things would be much worse if we hadn’t acted so forcefully.” Fed actions were “effective,” Williams added.

The recovery shows hints “of a stronger, self-sustaining recovery,” he said, singling out the jobs data. “Still, we have a long way to go.”

He said the obstacles to greater growth, are tight credit, uncertainty, and government contraction. “Things are getting better as far as tight credit and uncertainty are concerned,” he said, but he warned government spending probably won’t spike soon. “Indeed, spending at the federal level is set to contract sharply at the end of this year as several temporary programs end. Some of those programs may be extended. But overall, we can expect federal spending trends to weigh on near-term economic growth.”

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