The Fed released Bernanke's prepared statements this morning that were intended to describe the Fed's exit strategy to the House Financial Services Committee. The statements were released to the public even though the blizzard prevented the committee meeting to take place. Here's how Bernanke summarized his statement
we have been working to ensure that we have the tools to reverse, at the appropriate time, the currently very high degree of monetary stimulus. We have full confidence that, when the time comes, we will be ready to do so
These tools to reverse the high degree of monetary stimulus were described in detail. One tool mentioned was the discount rate which they seem intent to raise before the Fed funds rate:
before long, we expect to consider a modest increase in the spread between the discount rate and the target federal funds rate.
However, as this BestCashCow describes, the discount rate is "not as influential as the Fed Funds rate in impacting short term deposit and bond rates."
Bernanke repeated the same line about keeping rates low for an extended period:
The FOMC anticipates that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
Are there any signs about when interest rates will rise? Below are some opinions:
From AP News:
Bernanke repeated the Fed's pledge to hold rates at record lows for an "extended period." Economists think that means for at least six more months. But Bernanke cautioned that the Fed eventually will need to raise rates to ease inflationary pressures.
From Calculated Risk Blog
It is unlikely that the Fed will raise the Fed Funds rate any time soon (very unlikely this year, and maybe not in 2011).
However the Fed might use an alternative short term interest rate - such as interest rate paid on reserves - to communicate policy.