Federal Reserve policymakers will make an announcement Wednesday following a two-day meeting, with analysts predicting that the central bank would cut borrowing costs for the second time in as many months.

Most economists expect the Fed to announce Wednesday a cut of a quarter of a percentage point in its federal funds short-term interest rate to 4.50 percent.

However, some analysts in recent days have questioned whether the central bank will trim rates at all, while other Fed watchers believe the Fed may implement a deeper cut of half a percentage point.

The divergence of opinion about the Fed's likely next step reflects the choppy economic waters the central bank is seeking to navigate.

"Our central expectation for the October 30-31 FOMC meeting is a 25-basis-point cut with a statement that declines to give an explicit balance-of-risks assessment and thus leaves the door open to additional easing," Goldman Sachs economist Jan Hatzius said in a briefing note.

"However, we believe the probability of a 50-basis-point cut is substantially higher than that of no move," Hatzius cautioned.

The Federal Open Market Committee (FOMC) caught some economists off guard on September 18 with an aggressive rate cut of half a percentage point, the first rate reduction in four years. It slashed borrowing costs to 4.75 percent, after having held rates steady since June 2006.

The minutes from the FOMC's September meeting revealed policymakers were worried about the "exceptionally weak" housing market and expectations of softer economic growth in coming months.

The US housing market has since deteriorated.

Sales of existing homes and apartments dived eight percent in September, extending one of the worst housing slumps in decades, to a seasonally adjusted rate of 5.04 million properties.

Home sales have plummeted as the glut of unsold properties flooding the market has risen to its highest level in almost 20 years.

Other economic gauges are giving lackluster readings and a fresh monthly snapshot on consumer confidence released Tuesday is unlikely to please Fed chairman Ben Bernanke.

The Conference Board said consumer confidence tumbled for the third month in a row and continues to hover around two-year lows, as its index tracking consumer well-being dipped to a reading of 95.6 in October.

"Further weakening in business conditions has, yet again, tempered consumers' assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead," said Lynn Franco, the Conference Board's research director.

Other economic crosswinds are also testing the Fed's navigation skills.

"We expect growth to slow over the next several quarters. Although consumer spending has held up thus far, we expect the continued weakness in housing, tighter credit and rising energy prices to ultimately strain spending," economists at Lehman Brothers said in a briefing note.

Aside from a credit squeeze sweeping Wall Street, which has made it harder for private-equity firms to secure financing for takeovers, an already weak dollar continues to plumb fresh lows.

The euro struck a new record high against the ailing dollar Tuesday of 1.4441 dollars as the Fed deliberated. The US currency is at it lowest level against the British pound since 1981.

Economists say a Fed rate cut could depress the dollar even more.

A weak dollar could provoke another headache for the Fed as it may stoke inflation because it makes foreign goods and products pricier for Americans to purchase, especially oil.

Most economists say a rate cut is likely because the Fed wants to engineer a so-called "soft landing" for the world's largest economy. Lowered borrowing costs could also reignite growth and help stave off what some analysts say are the rising risks of a recession.

The FOMC is due to announce its latest move around 1815 GMT Wednesday.

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