i personaly stand " in the no time soon camp " though "cautiously" in this volatile environment , i believe , as i said previously , around fall of 2010 inflation and interest rates should hit the economy yet even the best economist don't realy know , so opinions remain just that . Here's what some experts think . :

The Fed

May 15, 2009, 1:38 p.m. EST

When will Fed get off zero? No time soon

By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) - The Federal Reserve is not expected to tighten monetary policy until the end of the year at the earliest, Fed watchers said this week.

Policymakers are seen in no rush to remove the economy from the elaborate life-support system central bankers have erected over the past year.

The Fed has bought massive amounts of private-sector assets to keep credit flowing through the economy. So whenever the Fed does stop and reverse this policy, there will be a major "jolt" to financial markets, experts said.

Gary Stern, the retiring president of the Minneapolis Federal Reserve Bank, said on Friday that the Fed did not have to hike rates "soon."

"We have some time to observe the performance of the economy and hope that the recovery will not only materialize but that it has a firm foundation," Stern said in an interview on Bloomberg television.

With signs that the economy has at least stopped its free-fall, Wall Street has started to debate the Fed's "exit strategy." It hasn't taken long for a bitter row between two camps to break out.

One side believes the money that the Fed has been pumping into the economy is bound to create inflation down the road and it is better to start worrying about it, and doing something about it, now.

Others take the opposite view and think there is so much slack in the economy that the threat of falling prices is being dismissed too easily. They are deeply concerned that it may be a long time before the recession ends.

The dispute almost has "theological" overtones, said James Glassman, economist at JP Morgan Chase.

Concerns about inflation won't go away even though consumer inflation as measured by the consumer price index has fallen 0.7% in the past 12 months ended in May. Read MarketWatch report on MAY CPI data.

Others, like Ian Shepherdson of High Frequency Economics, believe deflation "has much, much further to run." Wages are rolling over as unemployment soars, he said.

David Jones, a veteran Fed watcher, believes that Bernanke has a foot in both camps.

Bernanke is moving away from "a total preoccupation with the declining economy" toward a "leveling out" of activity, Jones said in an interview.

But, at the same time, Bernanke has "no great urgency at the moment to take any specific action to pull back," Jones said.

"I expect the Fed to keep the balance sheet quite high and the Fed funds rate level at record low for a significant part of this year," Jones said.

Some economists believe that the Fed will stay on hold far longer.

Dean Maki, co-head of U.S. economic research at Barclays Capital PLC, said the Fed is on hold until the end of 2010. "The Fed will take the cautious road," he said.

Maki said it was the combination of high unemployment -- 9.5% average in 2010 -- and falling core inflation -- 0.8% on core PCE price index by end of 2010 -- that will keep the Fed on hold.

"Just as it was in 2003 to early 2004, we think the Fed will be concerned enough about deflation risks in an environment of falling core inflation and high unemployment to want to keep rates on hold," he said.

Jay Bryson, economist at Wachovia, said the Fed will be on hold until "well into 2010."

"You have to see signs that the recovery is becoming sustainable," Bryson said.

This means that the massive declines in nonfarm payroll employment and business spending have to come to an end, he said.

The sooner-rather-than-later folks

But several economists think the Fed may have to act sooner.

John Taylor, a monetary policy expert at Stanford University, raised eyebrows this week when he said the Fed may soon have to start raising rates. He said that the appropriate level of the funds rate was now 0.5%.

Taylor has been one of the few vocal critics of the Fed's purchase of private-sector assets. He said they will be very difficult to sell once financial markets improve.

Robert Brusca, chief economist at FAO Economics, said the model of past recessions has been that a strong downturn generates a strong recovery.

The Fed may see fast growth over a four- to six-quarter span that will make it difficult for the Fed to "take its time."

Handle with care

But the bottom line is the Fed can do what it wants when the time comes to tighten, economists said. There is no rule book for ending the most massive effort in modern monetary history.

"This is all trial-and-error," Jones said.

Greg Robb is a senior reporter for MarketWatch in Washington.