Slowing economy can force fed to act

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Fed Chairman Ben Bernanke testifies before the Joint Economic Committee on Capitol Hill earlier this month.

With the dark cloud Europe's current financial crisis still hangs of the financial system of the world opened the Federal Reserve a two-day meeting Tuesday with speculation swirling that politicians could announce more stimulus to boost the U.S. economy.

A decisive Greek choice over the weekend makes it easier to fears of a looming financial disaster in the eurozone victory new democracy, to leave a centre-right party, which remain supported, Greece in the Monetary Union. This means that now at least investors stop can thoughts about the market chaos that left a Greek decision of the euro zone would follow.

Now sets the focus on the fed and how it could play his next hand.

Recent reports, including two straight months weak employment growth, suggest that economic growth is slowed down again after a tepid recovery. The stage for Fed Chairman Ben Bernanke central bankers that will approve more impetus, to questions although the possibilities are limited. In testimony said in this month is to be the Fed Bernanke if necessary provide.

Opinions are divided about what the Fed will do.

Some economists expect that extend makers "Operation twist", a program launched in last fall that the composition of government bonds by the Fed of Sportwetten assets for long-term investment kept fits. The idea is, push down long-term interest rates, making it easier for businesses and consumers credit to get. The program is June 30 expire, although the Fed could decide, beyond at this point.

Others hope program, known as "quantitative easing", QE, in which the Fed essentially prints money for long-term mortgage or Government bonds to buy for something stronger, such as an other massive bond buying.

That would be controversial, because previous efforts had a questionable success rate and it runs the risk of inflation down the road because it increases the money supply. Also, economists say the Fed is expected to want something in his arsenal to abide, if the Economic Outlook further deteriorated in the course of the summer.

Richmond Fed President is an extension of "operation twist" probably first step after Al Broaddus.

"I think if there is a significant risk and action is required, they have to do something this week" Broaddus told CNBC. "My guess is that it is some sort of change the operation twist."

He said that the focus of the meeting would be domestic U.S. conditions with some discussion of the eurozone crisis.

Barclays Capital strategist Alan James and Edmund Shing expect an extension of the Fed operation twist, weakness in manufacturing output and consumer sentiment on.

"The soft patch in U.S., holds major economic data" she wrote in a research note Monday.

The only other options open for the Fed is adjusting the interest rates which are already at record low levels close to zero. In January, the Fed said that it plans hold to get prices until the end of 2014 to the economic recovery. The Fed would have to signal that she is planning to hold prices even further in the future now.

The worsening debt crisis in Europe and fears whether Congress will keep in the year 2013-on tax increases and Government, the cost-cutting measures,-also known as the "fiscal cliff"-should start on the trust of consumers and the economy, with a weight of are.

Evidence that Europe's fear of the investors suffer, have a negative impact on the US economy will be, yet not long finished were seen Monday in the Spanish borrowing costs, with 10-year bond yields rose beat 7.30 percent-the highest in the euro area history and forces of the movement, the other struggling eurozone Nations to seek an international bailout.

Yet the unrest in Europe said not too much should factor in the Fed plans this week Dino Kos, a former Vice President New York Fed. Weakness in Europe should already be included in the Fed forecast, he told CNBC.

"It really affect their thinking should not although the situation become still worse," he said. "Is the way it should impact the European slowdown affects US growth on their thinking, and comes up to such a degree then the growth, they need to deal with it?"

Kos said that the best position for the Fed this week would be fire, keep the possible negative consequences given the fiscal cliff.

"Do you want the Federal Reserve have some reserve?", he said that there are many uncertainties in connection with the fiscal cliff, given the timing, and the uncertainty of what will be the political situation at the end of the year.

"I would say that they should wait," he said.

Reuters contributed to this report.