The Federal Reserve looks set to launch a fresh effort Wednesday to invigorate the faltering U.S. recovery, embarking on what could be the first in a series of incremental steps to foster stronger growth.

The central bank appears likely to try to push long-term borrowing costs lower by rebalancing its $2.8 trillion portfolio of bond holdings to weight it more heavily to longer-term securities.

Such a move would fly in the face of Republican objections to Fed activism.

Top GOP congressional leaders wrote to Fed Chairman Ben Bernanke this week urging the central bank to desist from further economic interventions, echoing criticism voiced by Republican presidential candidates in recent weeks.

Fed officials, however, believe that by shifting their bond holdings they can encourage mortgage refinancing and push investors into riskier assets, such as corporate bonds and stocks, without stoking a rise in consumer prices.

Members of the Fed's policy-setting committee are expected to announce their decision at about 2:15 p.m. at the conclusion of a two-day meeting.

Faced with an intractable 9.1 percent unemployment rate, consumer and business confidence sapped by a troubling U.S. credit downgrade and an escalating sovereign debt crisis in Europe, Fed officials have signaled they would seek to prevent already sluggish U.S. growth from weakening further.

The economy grew at less than a 1 percent annual rate over the first half of the year and analysts have warned of a heightened risk of recession.

The U.S. recovery has now demonstrated a renewed loss of momentum, one now joined by a more pronounced slowdown globally, TD Securities economist Eric Green told Reuters. In this environment the Fed will remain in crisis management mode.

BROOKING DISSENT

The International Monetary Fund warned on Tuesday that the United States could fall back into recession if the government tightened its budget too quickly.

As part of its policy prescription, it recommended the Fed consider a further easing of monetary policy as long as there was no sign an inflationary psychology was taking root.

The Fed has already embarked far down one of the most aggressive monetary easing paths on record. It cut overnight interest rates to near zero in December 2008 and then moved to more than triple its balance sheet to $2.8 trillion through a series of bond purchases.

After its last meeting Aug. 9, the Fed said it expected to hold rates at rock-bottom levels at least through the middle of 2013, a decision that drew three dissenting votes.

Critics say the easing campaign has failed to produce results and warn it could backfire and actually cause damage.

We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy, Republican congressional leaders wrote in the letter to Bernanke, which they released on Tuesday.

The central bank's policies have become a topic on the presidential campaign trail, as well.

Texas Gov. Rick Perry, a leading Republican candidate, said any further Fed money printing would be almost treacherous, treasonous, and his principal GOP rival, former Massachusetts Gov. Mitt Romney, said he would replace Bernanke, a Republican first appointed by President George W. Bush.

LET ME EXPLAIN

Political pressure is unlikely to deter the Fed from acting, but it could cause the central bank to boost efforts to explain its policies and justify its actions.

Analysts say that with the economy still expanding, and with inflation not far from the central bank's preferred levels, the Fed will likely take only a small easing step on Wednesday.

Financial markets widely expect the Fed to rebalance its portfolio in a program sometimes referred to as Operation Twist after a like-named Cold War-era monetary maneuver.

One unknown is whether the Fed will opt to actively sell short-term assets and replace them with longer-dated securities, or whether it will simply replace maturing securities.

Markets also think the Fed may cut the interest rate it pays banks for excess reserves held on deposit at the central bank, a move that might push banks to make loans rather than let the funds languish.

In addition, many observers expect the Fed to give serious thought to more clearly defining what levels of unemployment or inflation might prompt it to begin to tighten financial conditions -- although deliberations on that subject are unlikely to lead to a quick decision.

By making its intentions crystal clear, the Fed could underscore the prospect of easy money until economic conditions improve convincingly.

(Reporting by Mark Felsenthal; Editing by Steve Orlofsky)