Wall Street Journal Online (08/16/12) Michael Derby

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota says the U.S. Federal Reserve may need to be willing to let inflation rise above its 2% target to reduce “quite elevated” levels of unemployment. Kocherlakota notes the central bank has mandates both to keep prices contained and to promote job growth, adding that there can sometimes be tradeoffs when there are large imbalances at play. “In a context, in a world, where unemployment is as high as it is,” allowing inflation to tip over the current central bank target of 2%”could well be part of an appropriate policy,” Kocherlakota says.