More: http://www.reuters.com/article/2012/01/22/us-usa-fed-target-idUSTRE80L0NU20120122The Federal Reserve could take the historic step this week of announcing an explicit target for inflation, a move that would fulfill a multi-year quest of the central bank's chairman, Ben Bernanke.
While Bernanke has touted a numerical inflation goal as a cornerstone of central bank best practices for years, the idea has become timely because it could help quell nagging doubts that the Fed's unprecedented easy money policies are setting the stage for a nasty bout of inflation.
The U.S. economy strengthened toward the end of last year, with job growth accelerating and the unemployment rate dropping to a near three-year low of 8.5 percent.
But the recovery is not expected to retain the momentum.
By announcing a target, the Fed could smooth the path to another round of bond buying should the recovery falter.