Will the Fed Keep Rates Low till 2014?

Federal Reserve Chairman Ben Bernanke heads back to Capitol Hill this AM amid a bullish market that saw indices regain a lot of lost ground since the crisis began in 2008. The chairman is likely to face a wide array of questions, from concerns over the overly accommodating monetary policy to that over increasing gas prices.

The chairman's stance has so far been cool towards bullish developments that suggest the economy may not be as weak as thought when the 2014 potential commitment to low rates was put in place. He did not offer any clues to a retracement in that position following the significant beat to January unemployment numbers. Will recent market developments offer the Chairman what he needs to believe the economy is definitely in the right track and thus does not need as much handholding?

Brian Gardner of Washington research at KBW Inc. suggests to MarketWatch that committee members may be too busy trying to score political points in this election season to quiz too hard on possible inflation risks resulting from an overly accommodating monetary policy. Instead, he thinks, the committee may choose to be focused on the issues of the budget deficit and the housing policy options laid out by the Fed's recent white paper report. “The Fed is not popular with Republican voters, so there may be an added incentive for a member to disagree with Bernanke,” Gardner told MarketWatch.