Fed Policy-Making Panel to Meet as Growth Faces Threats WASHINGTON - In retrospect, this might not have been the best week for a long-scheduled meeting of the Federal Reserve's policy-making committee. Fed officials will convene Tuesday and Wednesday to decide whether the economy needs more help amid considerable uncertainty about the rate of domestic growth and about the impact of the latest developments in Europe's lingering crisis. The Fed's chairman, Ben S. Bernanke, and other committee members suggested in public appearances this month that they were not yet convinced the rate of growth was slowing, nor that another round of aid was warranted. More time and more data might well have provided greater clarity. But the Fed is scheduled to complete this month its most recent effort to reduce interest rates, known as Operation Twist, and financial analysts warn that the central bank, if it does not announce a new program, could disappoint investors who have come to expect intermittent injections of monetary policy. "While the Fed hates being held hostage by market expectations, we doubt it will be prepared to disappoint global investors this week," Lou Crandall, chief economist at Wrightson ICAP, wrote in a note to clients on Monday. The Fed also confronts a particularly complex version of its necessary but impossible task of predicting the future. Two unusually tangible risks loom large. Events in Europe could freeze financial markets and political dysfunction in Washington could push the domestic economy back into recession. Central banks typically are reluctant to stimulate growth in the expectation of a slowdown, fearing they will end up doing too much. But the Fed's vice chairwoman, Janet L. Yellen, suggested this month that this might be the rare moment when the central bank should consider prophylactic measures. "It may well be appropriate to ensure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest," Ms. Yellen said. The Fed is already engaged in a substantial and multilayered campaign to enhance growth. It has kept short-term interest rates near zero since late 2008, and said that it planned to maintain that policy until late 2014, at least. It has bought more than $2 trillion in Treasuries and mortgage securities to further reduce long-term interest rates. And in a program scheduled to end this month, it has shifted the composition of its portfolio to press down even harder on long-term rates. Mr. Bernanke has been clear about the threshold for additional action, telling Congress the decision hinged on whether the Fed expected the economy to grow fast enough to reduce unemployment, as inflation remains firmly in check. "That's the essential decision," Mr. Bernanke said. Will there be enough growth going forward to make material progress on the unemployment rate? The 12 members of the committee will arrive with updated economic forecasts, which will be published Wednesday after the Fed announces any changes in policy. Mr. Bernanke also plans to hold a news conference Wednesday afternoon. If the Fed decides to act, a wide range of analysts said the central bank was most likely to extend its current campaign, Operation Twist. The program involves the sale of short-term securities to finance the purchase of securities with longer terms, putting downward pressure on long-term rates. Alternatively, the Fed could take the more modest step of announcing that it intends to hold short-term rates near zero beyond 2014. It also could take the more forceful step of expanding its investment portfolio. David Greenlaw, an economist at Morgan Stanley, said he expected the Fed to announce that it would buy a mix of Treasuries and mortgage securities to further reduce borrowing costs for businesses and consumers. "Had there been a major risk-on rally in financial markets in response to the election outcome in Greece we might have lost a bit of confidence," he wrote in a note to clients Monday. But it seems clear that there is no such response forthcoming and thus we continue to expect a significant policy announcement from the Fed. Republicans have been vocal in their opposition to new actions by the Fed, while Democrats have offered relatively little public support. Mitt Romney, the presumptive Republican presidential nominee, said Sunday that another round of asset purchases would most likely do more harm than good. The last round of purchases "did not put Americans back to work, did not raise our home values, did not bring jobs back to this country or encourage small businesses to open their doors," Mr. Romney said on CBS's "Face the Nation." As for the consequences, Mr. Romney said the program was "not extraordinarily harmful, but it does put in question the future value of the dollar and it will obviously encourage some inflation down the road." Most studies of the Fed's actions have concluded that asset purchases provide a modest boost to the economy, although other obstacles have muted the impact. People who cannot qualify for a loan do not benefit from low rates. Inflation remains near the 2 percent annual rate that the Fed regards as most conducive to steady long-term economic growth, and Fed officials maintain that asset purchases will not increase the pace of inflation. Analysts said the benefits of additional action would be marginal, particularly if the Fed chose to extend Operation Twist for a few months. But they said the Fed still might tip back into action to avoid giving the impression that the end of Operation Twist signaled a reduction in its efforts to stimulate growth. Fed officials argue that the impact will endure so long as the assets remain in the Fed's portfolio, but they acknowledge that perceptions could undermine that reality. If the markets decide the Fed is pulling back, rates could rise. Martin Schwerdtfeger, a senior economist at TD Bank in Toronto, predicted last week that the Fed would not act at this meeting unless the outcome of the Greek elections unnerved financial markets. But he said Monday that he had concluded the Fed might act simply to avoid unnerving markets itself. "If I had to bet money on it today, I would say there is a 50 percent chance," he said.