Fed's Kocherlakota comments - Drop in neutral rates adds to fin stability risks

Comments from Minneapolis Federal Reserve President Kocherlakota, speaking in Seoul:

• Drop in neutral rate makes fed's job harder, adds to financial stability risks
• Says raising inflation target could give the Federal Reserve policy 'space' to combat shocks
• Higher inflation target could also mitigate financial stability risks
• FOMC would need to weigh benefits of raising inflation target against costs

So, Kocherlakota floats the possibility of increasing the Federal Reserve's inflation target

As a way to reduce financial stability risks and make it easier for the Fed to achieve price stability and full employment

Keep in mind, Kocherlakota is very much at the dovish end of the spectrum and he wants to keep rates low. These proposals from him appear to be him coming up with arguments to support his views. Its not like he is the only person in the world to do this, but bear this in mind.