This would be out of character:

The Federal Reserve could adopt an explicit inflation target like that of the UK in order to keep up public expectations of future price rises, one of the most influential regional Fed presidents has said in a speech.

William Dudley, the head of the Federal Reserve Bank of New York, said that being more explicit about the Fed’s goal “could help anchor inflation expectations at the desired rate” and “clarify the extent to which the current level of inflation falls short of that rate”.

Mr Dudley’s remarks are important because the Fed’s last policy statement focused heavily on inflation running below the levels it thought consistent with its mandate. Taken together they suggest that the Fed may be moving towards greater inflation targeting even if it does not adopt an explicit numerical goal.

The background here is that the Federal Reserve is failing. Not just in maximizing employment, but in hitting their inflation targets. And fixing these actually goes hand-in-hand at this point. Increasing the inflation targets will loosen monetary policy and potentially create more jobs and higher wages. Maybe in other cases these policies are not complementary to the dual mandate, but they almost certainly are right now.

Dudley even brooched the unthinkable subject of making up for below-target inflation in future years:

Mr Dudley also raised the prospect of an even more controversial policy: a price level target in which the Fed promised to allow higher inflation in future years in order to make up for any below target inflation while interest rates are stuck at zero.

“One possibility would be to keep track of inflation shortfalls when the federal funds rate is constrained by the zero bound, as is the case today. For example, if inflation in 2011 were a 0.5 percentage point below the Fed’s inflation objective, the Fed might aim to offset this miss by an additional 0.5 percentage point rise in the price level in future years,” Mr Dudley said.

This is the most expansionary statement from a Fed policymaker that I’ve seen. With Janet Yellen and Sarah Bloom Raskin on the board of Governors, we could see some actual Fed policy shifts come November. That will be too late for the elections, but just in time to boost the economy.