Debate is heating up within the Federal Reserve over how and when to signal that the days of record-low interest rates are numbered.

A rate hike isn't imminent. But at their meeting Tuesday, Federal Reserve Chairman Ben Bernanke and his colleagues will likely focus on how to telegraph that higher rates are coming once the economic recovery is more deeply rooted. Eventually, Fed policymakers will need to start bumping up rates to head off inflation.

It will be a challenging maneuver. Fed officials will want to signal a move to higher rates in advance so borrowers and investors aren't jarred. And they will need to send a signal that isn't confusing.
The Fed has held rates at a record low near zero since December 2008. Bernanke and other Fed officials have said low rates are still needed to underpin economic growth.

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By Catherine

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