Higher inflation target is preventative, not a cure
I had 3 comments on recent posts taking me as having recommended a higher inflation target now as a cure for the current zero bound episode. That's not my position. A higher inflation target would help avoid the next episode, but probably not help this one. The Fed, despite the options of talking down future rates and undertaking QE are still struggling to achieve their current mandate. (And the same goes for the BoE, the ECB and other central banks too). Raising the target now, without a means to exert the concerted stimulus to achieve it, may simply set the Fed up to fail. One might speculate 'off model' that a higher target now would raise expected inflation all by itself, but, equally, if the Fed simply undershot this higher target for longer than it would undershoot the current target, that could undermine confidence in the Fed's competence, or its honesty. These views were made clear in a post back in May last year.