The President of Federal Reserve Bank of San Francisco, John C. Williams said that U. S. banks are unwilling to increase lending because of a slow recovery from the recession. Recent economic data has indicated that economy of the nation is unstable and may lose its momentum.

Williams said today in a speech in San Francisco that the unemployment rate in the country will continue to fall may fall to 8.5% at the end of this year. He further added that the US will not achieve full employment for several more years. Inflation rate in the country is likely to drop to about a 1.5% in the latter half of the year.

William also said that once the economy improves significantly, the Federal Reserve Bank will be required to raise interest rates to protect the economy from overheating and budding of inflation. In response to the question from the audience, William said that they are expecting the long-term securities purchase programs to raise the level of GDP by 3%, this year. A gradual improvement in the rate of employment is also expected.