SF Fed chief John Williams favors QE3 John Williams, president of the San Francisco Federal Reserve Bank, said this week that the lack of progress on reducing the unemployment rate and the slow economic recovery have convinced him it's time for the Fed to move ahead with a third round of stimulus known as quantitative easing, or QE3. Williams' views are important because this year he is a voting member of the Federal Open Market Committee, a group within the Fed that typically meets eight times a year to make key decisions about monetary policy. In an interview with the Financial Times in late July, he said that unless "further action" were taken, there would be a lack of progress toward employment, but stopped short of calling directly for a Fed move because of uncertainty surrounding the costs and benefits of a stimulus. Normally the open market committee tries to achieve the Fed's dual mandate - fostering employment while keeping inflation in check - by raising or lowering the target federal funds rate, the interest rates that lending institutions charge one another. In addition to slashing this short-term rate to near zero in December 2008, the committee has been taking unconventional measures to stimulate the economy, such as buying Treasury and mortgage-backed bonds. Williams said he became convinced that QE3 is necessary when a consistent economic picture emerged this summer - weaker consumer and business spending, weaker unemployment numbers, disappointing gross domestic product reports and signs that Europe's problems were taking a toll on the U.S. economy. The open market committee has 12 members - seven Federal Reserve Board governors (including Fed Chairman Benjamin Bernanke and Yellen); the president of the Federal Reserve Bank of New York; and four of the remaining 11 Reserve Bank presidents, who serve one-year terms on the committee on a rotating basis. Last weaponSome economists say the Fed should hold QE3 in reserve, in case lawmakers cannot agree to forestall tax increases and spending cuts scheduled to take effect in January and the economy falls off the fiscal cliff.