One option that is clearly not on the table is allowing an unacceptable rise in inflation,

The uncertainties on the upside (for inflation) have only gotten bigger since Katrina slammed into the Gulf Coast.

The Fed has and must have a commitment to price stability. The uncertainties on the upside (for inflation) have only gotten bigger since Katrina slammed into the Gulf Coast,

The Fed has and must have a commitment to price stability, ... The uncertainties on the upside (for inflation) have only gotten bigger since Katrina slammed into the Gulf Coast.

Higher oil prices may be partly passed through to core inflation at least for a time,

To me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target.