A Fed spokesman said a meeting of the central bank's policy-setting Federal Open Market Committee resumed around 8:30 a.m. (1330 GMT). A policy statement is expected around 2:15 p.m. (1915 GMT).
Fed officials say they are focused on developing an exit strategy from an unprecedented dose of monetary stimulus the central bank delivered to counter the worst financial crisis since the Great Depression.
Nonetheless, the central bank will almost certainly reiterate its commitment to keeping interest rates at rock bottom lows for some time, particularly given jittery financial markets and a spotty economic recovery.
We expect no change in the funds rate, no change to the scheduled alterations of the balance sheet, and no fundamental change to the language committing the Fed to keeping the funds rate 'exceptionally low' for an extended period, said Maury Harris, an economist at UBS.
Weak holiday retail sales and further setbacks in housing has dampened talk of any immediate rush for the doors. Instead, policy-makers will continue to debate the merit of various tools that might be used to drain credit from the banking system.
The Fed gathers amid a firestorm in Washington over Ben Bernanke's nomination to a second term as chairman of the U.S. central bank. Once expected to sail through the Senate, his confirmation vote ran into stiff resistance last week, sending Wall Street, which strongly backs the chairman, sharply lower on Friday.
While no substantive policy announcements are expected on Wednesday, investors are curious about whether the Fed will soon raise the discount rate it charges banks for emergency loans, and will parse the statement for any clues such a move is imminent.
Financial markets, which took a drubbing last week, have stabilized as Bernanke's confirmation began looking more certain. The latest Reuters tally showed 47 out of 100 senators were likely to vote for Bernanke, while 19 vowed to vote against him. The rest remain undecided.
The Senate will take up the nomination on Thursday with a vote to overcoming procedural roadblocks. A final confirming vote could also come the same day.
Bernanke's term expires on January 31, at which point Vice Chairman Donald Kohn would likely take over if the vote has not yet gone through.