With interest rates entering their 19th straight month at near-zero levels, the Federal Reserve has been robbed of their usual big guns in monetary policy. But that doesn’t mean they don’t have a role to play in encouraging economic growth. For months since the passage of the federal stimulus has proven too small to make a difference, the Fed has sat on their hands and even openly considered selling off assets and raising interest rates, despite mass unemployment and no sign of any inflation concerns.

Now, with the government paralyzed by inaction on further investment and with the economy at risk, some Fed governors are at least thinking about ways to prolong the recovery through their actions, however modest.

With Congress tied in political knots over whether to take further action to boost the economy, Fed leaders are weighing modest steps that could offer more support for economic activity at a time when their target for short-term interest rates is already near zero. They are still resistant to calls to pull out their big guns — massive infusions of cash, such as those undertaken during the depths of the financial crisis — but would reconsider if conditions worsen.

Top Fed officials still say that the economic recovery is likely to continue into next year and that the policy moves being discussed are not imminent. But weak economic reports, the debt crisis in Europe and faltering financial markets have led them to conclude that the risks of the recovery losing steam have increased. After months of focusing on how to exit from extreme efforts to support the economy, they are looking at tools that might strengthen growth.

“If the economic situation changes, policy should react,” James Bullard, president of the Federal Reserve Bank of St. Louis, said in an interview Wednesday. “You shouldn’t sit on your hands. . . . I think there’s plenty more we could do if we had to.”

Bullard talks here like the Fed has a choice in the matter. In fact, maximizing employment is one of their two main missions, the other being price stability. And prices should be stable for some time – if anything, economists worry about deflation. So the Fed has no other reason to exist other than taking aggressive actions to spur growth.

Even here, they propose little of consequence. The major potential items in the article include: committing to near-zero interest rate policy for longer than the current expectation; cutting the interest rate on reserves held by banks at the Fed to zero, encouraging lending instead of hoarding capital; and buying more mortgage-backed securities to offset the ones they’re selling off.

The latter option just props up the housing market a bit longer; the second probably won’t lead to more lending since the problem exists on the demand side; and the first would be nothing more than a semantic change. Nowhere in here does anyone seem enthused by the idea of having the Fed purchase Treasury bonds as they did to the tune of $300 billion in 2009, really the one big action available to them. If they were to do so I’d expect the same conservative economists to howl about America becoming the next Zimbabwe, but given the scope of unemployment and excess capacity the threat of inflation is totally overblown. Curiously, the article raises the spectre of deflation if the Fed opts to purchase assets, though that’s the current trajectory if they do nothing.

All told, it’s good that the Fed even has the slowdown on their radar screen. With the OECD extremely worried about long-term jobless in the US, it’s high time officials in this country show some urgency. This quote alone reveals more awareness and foresight that we’ve seen from economic policymakers in quite some time:

“I think we do have a variety of tools available, and we shouldn’t rule any tool out,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in an interview. “If we’re uncomfortable with how long it’s going to take us to reach either element of our dual mandate [of maximum employment and stable prices], we’ll have to make some adjustments to policy.”

At least the Board of Governors remembers their dual mandate.

The prospect of some decent monetary policy could brighten with the filling of three positions on the Fed board, and as luck would have it, the hearings for those nominees start next week. Janet Yellen, Peter Diamond and Sarah Bloom Raskin would immediately raise the prospects for a more activist board, or at least more nods toward the mission of full employment than we’ve previously seen. Until today, at least.

UPDATE: Former Fed official Joseph Gagnon shows the possible world available to monetary policymakers.