“The risk of double-dip recession has probably receded some in the last six to eight weeks," Bullard said today in an interview with CNBC. "The economy has slowed, but it hasn’t slowed so much that it’s an obvious case to do something. A very reasonable decision would be to say, ‘maybe we should push it off a meeting or two and see how the data comes in.’

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Bullard said the next Federal Reserve meeting on Nov. 2-3 will be an analysis “blizzard” and the decision will be a “tough call.” 

“I will go into the meeting with an open mind and you don’t want to prejudge these things,” he said. While the case for more stimulus isn’t a “slam dunk,” if the situation calls for it, “we’ll have to take action,” he said.

(Editor's note:  Click here for CNBC's take on Bullard's "not a slam dunk" comment some months later.

What I envision from the current vantage point is an anemic recovery, but not one that slips into reverse gear. Thus, barring an unforeseen shock, I have concerns about the efficacy of further expanding the Fed’s balance sheet until our political authorities better align fiscal and regulatory initiatives with the needs of job creators. Otherwise, further quantitative easing might be pushing on a string. In the worst case, it could flood the engine of the economy with gas that might later ignite inflation.

The size of the unemployment gap, combined with the fact that inflation has been running below the level I consider consistent with long-term price stability, suggests that it would be desirable to increase monetary policy accommodation to boost aggregate demand and achieve our dual mandate.

Viewed through the lens of the Federal Reserve’s dual mandate—the pursuit of the highest level of employment consistent with price stability, the current situation is wholly unsatisfactory. Given the outlook that the upturn appears likely to strengthen only gradually, it will likely be several years before employment and inflation return to levels consistent with the Federal Reserve’s dual mandate.

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We have tools that can provide additional stimulus at costs that do not appear to be prohibitive. Thus, I conclude that further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long.

Rosengren, a voting member of the Fed’s policymaking Federal Open Market Committee, said in an interview with Market News International that he will go into the Nov. 2-3 meeting with an “open mind” about whether or not the Fed should inject more monetary stimulus into the economy.

However, he made clear that he would favor a resumption of quantitative easing if the economy does not show improvement on both unemployment and inflation. Further deterioration is not necessary to justify Q.E. in his mind.

Rosengren was more dubious about the merits of changing the Fed’s communication strategy to raise inflation expectations and lower rates, saying he doesn’t perceive there to be a communication problem with the market. He was also skeptical as to whether cutting the already  bare-bones interest rate on excess reserves would accomplish much.

Were deflationary expectations to materialize — and let me repeat, I do not see much risk of this — I would support appropriate steps to raise expectations of inflation, including, perhaps, aggressive asset purchases coupled with clear communication that our goal is to combat deflationary expectations. But for such a strategy to be successful, the public must believe that the Fed can and will act to combat those expectations. The Fed must be credible. Protecting that credibility is why, based on my current outlook, I do not support further asset purchases of any size at this time. As I said earlier, asset purchases in our current economic environment can do little if anything to speed up the return to full employment. But if the public believes that they can and is disappointed, it may have less confidence that the Fed will act to raise inflationary expectations if needed. Because I see little gain at this point, and some costs, I would prefer not to engage in further asset purchases at this time.

To not trigger [additional measures from the Fed like resuming purchases of government securities], I would want to see that there was the prospect of progress in the forecast toward achieving both much higher levels of employment and, eventually, higher inflation, closer to my 2 percent target...

“To have a substantial effect, people would have to anticipate substantial purchases,” Mr. Kohn said. “Does the Federal Reserve need to announce it’s buying $1 trillion? Not necessarily. If the Fed said, ‘We’re buying a smaller amount now, but we’ll continue to watch the situation and if it warrants, we’ll buy more,’ that sort of thing would give the public and the markets a sense that someone was out there, ready to buy if the economic situation weakened further or didn’t improve.”

Under what conditions would the FOMC make further use of these or related policy tools? At this juncture, the Committee has not agreed on specific criteria or triggers for further action, but I can make two general observations.

First, the FOMC will strongly resist deviations from price stability in the downward direction. Falling into deflation is not a significant risk for the United States at this time, but that is true in part because the public understands that the Federal Reserve will be vigilant and proactive in addressing significant further disinflation. It is worthwhile to note that, if deflation risks were to increase, the benefit-cost tradeoffs of some of our policy tools could become significantly more favorable.

Second, regardless of the risks of deflation, the FOMC will do all that it can to ensure continuation of the economic recovery. Consistent with our mandate, the Federal Reserve is committed to promoting growth in employment and reducing resource slack more generally. Because a further significant weakening in the economic outlook would likely be associated with further disinflation, in the current environment there is little or no potential conflict between the goals of supporting growth and employment and of maintaining price stability.

I believe the economy has the wherewithal to recover. However, if, in an attempt to add further fuel to the recovery, a zero interest rate is continued, it is as likely to be a negative as a positive in that it brings its own unintended consequences and uncertainty. A zero policy rate during a crisis is understandable, but a zero rate after a year of recovery gives legitimacy to questions about the sustainability of the recovery and adds to uncertainty.

In the third quarter of 2003 … GDP expanded at what turned out to be nearly a 7 percent annual rate, yet rates were left at 1 percent for several months. With the low rates very low for a considerable period, credit began to expand significantly and set the stage for one of the worst economic crisis since the great depression. In my view, it was a very expensive insurance premium. Unemployment today is 9.5 percent. I fully acknowledge that I was on the FOMC at that time. That’s why I believe that zero rates during a period of modest growth are a dangerous gamble.

"No amount of further monetary accommodation is going to do the trick,” he said in response to audience questions after a speech today in San Antonio. “We’ll be pushing on a string, in my opinion.”

Talk of new efforts to stimulate the economy are premature right now... I don’t think the data have been sufficiently compelling one way or another.

The rationale for not going all the way to zero has been that we want the short-term money markets, like the federal funds market, to continue to function in a reasonable way because if rates go to zero there will be no incentive for buying and selling federal funds, overnight money in the banking system. And if that market shuts down, if people don't operate in that market, it'll be more difficult to manage short-term interest rates when the Federal Reserve begins to tighten policy at some point in the future.

So there's really a technical reason having to do with market function that has motivated the 25-basis-point interest on reserves.

That being said, it would have a bit of effect on monetary policy conditions, and we would certainly -- we're certainly considering that as one option.

From the Q&A session

From the written testimony:   Of course, even as the Federal Reserve continues prudent planning for the ultimate withdrawal of extraordinary monetary policy accommodation, we also recognize that the economic outlook remains unusually uncertain.  We will continue to carefully assess ongoing financial and economic developments, and we remain prepared to take further policy actions as needed to foster a return to full utilization of our nation's productive potential in a context of price stability.

From the Q&A (much later):   But I'd like to emphasize that our forecast, our expectation is still for a moderate recovery. The numbers I gave today, 3 (percent), 3.5 percent, depending on the horizon, which will over time bring down the unemployment rates.   So that's still our main scenario, that the economy will continue to grow and that the final demand, private final demand will take over from inventory building and fiscal policy as the drivers of growth.

I think it's important to preface the answer by saying that monetary policy is currently very stimulative, as I'm sure you're aware...

You know, that being said, if the recovery seems to be faltering, then we at least need to review our options. And we have not fully done that review, and we need to think about possibilities. But, broadly speaking, there are a number of things that we could consider and look at.

One would be further changes or modifications of our language or our framework, describing how we intend to change interest rates over time, giving more information about that. That's certainly one approach.

We could lower the interest rate we pay on reserves, which is currently one-fourth of 1 percent.

The third class of things, though, has to do with changes in our balance sheet, and that would involve either not letting securities run off, as they are currently running off, or even making additional purchases.

We have not come to the point where we can tell you precisely what the leading options are. Clearly each of these options has got drawbacks, potential costs. So we are going to continue to monitor the economy closely and continue to evaluate the alternatives that we have, recognizing that, as I said, that policy is already quite stimulative.

From the Q&A, in response to a question about what easing options the Fed might have in the event of a downturn.