Published: Monday, 20 Jul 2009 | 11:39 PM ET

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The Federal Reserve will need to rein in accommodative measures to prevent inflation as a recovery takes hold, though the pace and timing will depend on the strength of the economy, central bank Chairman Ben Bernanke said in a Wall Street Journal article.

CNBC.com Ben Bernanke

Bernanke, who is set to begin two days of congressional testimony on Tuesday, stopped short of giving a timeframe when benchmark rates may be raised.

However, he laid out steps to exit some of the extraordinarily loose policies that the Fed enacted to support the economy throughout the financial crisis.

"Overall, the Federal Reserve has many effective tools to tighten monetary policy when the economic outlook requires us to do so. As my colleagues and I have stated, however, economic conditions are not likely to warrant tighter monetary policy for an extended period," Bernanke said in an op-ed article dated July 20 seen on the paper's website.

Bernanke pointed out two ways the Fed can tighten policy: raising the interest rate on bank reserves held at the Fed, and reducing the overall stock of reserves.

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To do the latter, Bernanke outlined four options:

1. Drain excess liquidity through large-scale reverse repurchase agreements, in which the Fed would sell securities from its portfolio and agree to buy them back later at a higher price.

2. Treasury could sell bills and deposit the proceeds at the Fed.

3. Offer term deposits to banks that would not be available for the fed funds market.

4. Sell a portion of its holdings of long-term securities into the open market.

The article conveyed a sense reflected by comments from other Fed officials that they are ready and willing to reverse some of the loose policies but only when the time is right and the recovery has taken root.

"Stabilization necessarily precedes recovery. A recovery has not yet taken hold, but should begin before too long," said Dennis Lockhart, president of the Atlanta Federal Reserve Bank, in a speech to the Rotary Club of Nashville on Monday.

Positive economic readings have increased speculation the Fed may have to move sooner rather than later in order to prevent inflation, given the loose policies and low interest rates around the world.

Still, in the article, Bernanke reiterated that he and his colleagues believe accommodative policies will be required for an extended period.

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U.S. consumer prices rose at a slightly faster than-expected 0.7 percent pace in June, but the bulk of the increase was due to soaring gasoline prices and the core measure of inflation remained relatively tame.

Many forecasters believe the world's largest economy is poised to climb out of a deep recession that started in December 2007, although deep job losses continue.

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