The magic words, in Fedspeak, to signal further quantitative easing (QE) is the Fed judging that inflation is lower than it should be.

For example, the September 2010 statement that signaled QE2 read:

Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability.

In the August 2011 Federal Open Market Committee (FOMC) statement, the Fed signaled that it may signal QE3.

The statement read:

The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

Essentially, the Fed is saying it will determine for the coming statements whether or not to put out its QE signaling statement that underlying inflation is below what it judges to be appropriate.

As for how long it will hold the benchmark interest rate unchanged, the August 2011 statement replaced the "extended period" language with the more precise language of "at least through mid-2013."

Quantitative easing Inflation