Traders' eyes are fixed on Washington.

As the Federal Open Market Committee prepares to release its policy statement on interest rates at 2:15 p.m., investors are bracing for new confirmation of an economic slowdown.

Wall Street will be listening for any new language hinting at the Fed's take on growth, as well as any mention of deflationary risk or specific actions the Board is prepared to take to boost the economy.

The statement could pressure U.S. stocks, unless the Fed signals that it s ready to act.

The Fed could announce a plan to purchase of Treasury bonds or reinvest income from mortgage-backed securities into the bond market, says Doug Roberts, chief investment strategist at Channel Capital Research and author of Follow the Fed to Investment Success. The central bank also could announce that it s prepared to print more money.

There is growing chatter that the Fed is once again going to come to the rescue, David Rosenberg, chief economist and strategist at Gluskin Sheff, wrote in a report, adding that a $2 trillion quantitative easing program could be in the works. The rumour mill is filled with talk of how the administration is cooking up a new scheme, through the channels of Fannie and Freddie, to forgive part of the mortgage loans for distressed homeowners who are upside down, a huge fiscal expansion that could bypass Congressional approval."

Traders will be less concerned with the statement's sentence about the the federal funds rate, which economists expect will remain unchanged at its historic low of 0% to 0.25%.

Most analysts expect the Fed to expand its cautionary language because recent economic data suggest the risk of a renewed recession has increased since its last policy meeting in June. Growth of the gross domestic product slowed during the second quarter to an annual rate of 2.4%, down from a 3.7% rate during the first quarter. The unemployment rate held steady at 9.5% in July, while the economy continued to shed jobs.

Without the Fed promising to do something, we have a void where the economy starts to deteriorate and people get nervous that nothing will happen until November, says Roberts, adding that Congress is unlikely to pass a job stimulus program before the fall elections. People are looking to the Fed for a Hail Mary pass.