The U.S. central bank's two rounds of asset purchases will boost GDP by about 3 percent and add about 3 million jobs by the second half of next year, a top Federal Reserve official said on Wednesday

The long-term securities programs, which began in 2008 and are set to end this month, also probably kept the United States from falling into deflation, San Francisco Federal Reserve Bank president John Williams said in remarks prepared for delivery at the regional Fed bank's headquarters to the American Economics Association.

"Of course, once the economy improves sufficiently, the Fed will need to raise interest rates to keep the economy from overheating and excessive inflation from emerging," he said.

The Fed can do so by raising the interest it pays on excess bank reserves along with its short-term interest-rate target, and by reducing its long-term securities holdings, added Williams, who is not a voting member on the FOMC.

Williams' vigorous defense of the Fed's so-called quantitative easing comes as a flurry of weak economic data has raised questions over whether the Fed's current $600 billion round of bond-buying will be enough to keep the recovery on track.

U.S. companies hired far fewer workers than expected in May, manufacturing output slowed to its lowest level since 2009, consumers are less optimistic, and housing prices sank to a new record low.

Futures traders have ratcheted up bets that the Fed will keep rates lower for longer, and trading suggests they do not expect the Fed to raise rates until next June at the earliest.

The Fed's latest round of asset-buying, which began last November, came under sharp criticism from politicians at home and abroad, who said it was probably fueling inflation.

Williams did not comment on the state of the U.S. economy, except to say that the Fed's asset purchases have improved financial conditions and helped stimulate economic activity.

Although the Fed's asset-buying programs boosted excess reserves at banks, the Fed can keep those reserves from fueling inflation by raising the interest it pays on them, Williams said.

Source: Reuters(Reporting by Ann Saphir; Editing by Ramya Venugopal)