NEW YORK - Although monetary theory suggests otherwise, inflation has remained tame and is expected to stay low for the next decade despite the "huge increase in the monetary base," Federal Reserve Bank of San Francisco President and CEO John C. Williams said Monday.

"Of course, if the economy improved markedly, inflationary pressures could build," Williams told the Western Economic Association International, according to prepared text released by the Fed. If the economy improves, he continued, "the Federal Reserve would need to remove monetary accommodation to keep the economy from overheating and excessive inflation from emerging" by either "raising the interest rate paid on reserves along with the target federal funds rate" or "by reducing its holdings of longer-term securities, which would reverse the effects of the asset purchase programs on interest rates."

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