The Fed's Narayana Kocherlakota has repeated the phrase so popular among bankers - that they must do "whatever it takes".
To Kocherlakota, that means that more stimulus may be warranted while inflation remains low. But he also thinks that the Fed may have to accept above target inflation in order to fix the labour market.
The recovery in the U.S. labor market continues to be painfully slow. As a consequence, the condition of the labor market remains disturbingly weak, representing considerable hardship for a large number of Americans and a significant waste of resources for the national economy.
Fortunately, there is good news: The low levels of inflation realizations and medium-term inflation expectations—both notably below the FOMC’s target inflation rate of 2 percent per year—demonstrate that there is considerable monetary policy capacity to provide much needed stimulus to the labor market.