The minutes from the March 15 Fed FOMC meeting were just released, and the most important excerpt is below. It confirms that the Fed is, for all intents and purposes, a giant money manager that will make decisions on whether to buy (continue QE2) or sell (reverse QE1 and QE2) mortgage and Treasury bonds as market conditions indicate. When they do start selling, rates would rise.
Members emphasized that the Committee would continue to regularly review the pace of its securities purchases and the overall size of the asset purchase program in light of incoming information–including information on the outlook for economic activity, developments in financial markets, and the efficacy of the purchase program and any unintended consequences that might arise–and would adjust the program as needed to best foster maximum employment and price stability. A few members noted that evidence of a stronger recovery, or of higher inflation or rising inflation expectations, could make it appropriate to reduce the pace or overall size of the purchase program. Several others indicated that they did not anticipate making adjustments to the program before its intended completion [on June 30].