If the Fed decides not to replace Twist with a new bond-buying program, the monthly amount of its long-term Treasury purchases would decline by half. Long-term borrowing rates might rise as a result.
When the Fed pumps more money into the financial system and adds to its portfolio, it's called quantitative easing, or QE. Critics argue that QE risks fueling inflation later. The Fed's portfolio totals nearly $2.9 trillion — more than three times its size before the 2008 financial crisis.
The Fed has launched three rounds of QE since the financial crisis hit. In announcing QE3 in September, the Fed said it would keep buying mortgage bonds until the job market improved substantially. It also extended its plan to keep its benchmark short-term rate near zero through at least mid-2015. And it raised the possibility of taking other steps.
Skeptics note that rates on mortgages and many other loans are already at or near all-time lows. So any further declines in rates engineered by the Fed might offer little economic benefit.
Inside and outside the Fed, a debate has raged over whether the Fed's actions have helped support the economy over the past four years, whether they will ignite inflation later and whether they should be extended.
The Fed is also expected to resume discussions on how to signal future policy moves to the public more clearly. Since August 2011, the Fed has identified a target date to try to reassure markets that it doesn't plan to raise short-term rates soon. Some Fed officials, however, oppose using a target date to signal the earliest when it might start raising rates. They've been urging that future interest-rate moves be linked to how the economy is faring as measured by unemployment and inflation.
Many private economists expect no change in the Fed's communications strategy this week.