In light of last week's revelations in the minutes from January's FOMC meeting, Chairman Ben Bernanke's congressional testimony this week will be watched particularly closely for any signs that he is more concerned about the potential costs of further quantitative easing. The change in tone in the minutes takes on greater significance when considered together with the recent speech given by Fed Governor Jeremy Stein, in which he argued that the "reach for yield" in the current prolonged low rate environment may trigger future problems in riskier high-yield credit markets. It is far from clear how many Fed officials share Stein's concerns, but if the view becomes widespread then the Fed might curb or even halt completely its open-ended asset purchases even before it sees the desired improvement in the labour market.
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