FT Harding writes that the Fed is arguing about adopting an explicit inflation target, and that resolution of this matter is a pre-condition of further easing.
For those Sumnerians out there – yes! NGDP is on the agenda. The bad news, however, is that if they cannot agree on inflation targetting they are unlikely to agree on an NGDP target.
It seems that QE3 remains the preferred option for the next big easing, with MBS having to be a part of any plan, a there just are not enough Treasuries – but also, the Fed is getting more interested in how policy works, and realises that the gummed up housing finance mechanism is as large a part of the problem as the level of rates.