WASHINGTON — The Federal Reserve is being engulfed by the one thing it tries to prevent: uncertainty.

Will the Fed take its first step Wednesday toward reducing the extraordinary stimulus it's given the U.S. economy?

Will its eventual pullback jolt the financial markets?

Who will fill several expected vacancies on the Fed's policy board next year?

And, with Lawrence Summers' withdrawal from consideration, who will lead the Fed once Ben Bernanke's term expires in January, ending one of the most tumultuous chapters in the Fed's 100-year history?

Uncertainty tends to rattle investors. Starting this week, the Fed may begin to supply the answers the financial markets are looking for.

Here's a look at the various uncertainties the central bank faces:

TO TAPER OR NOT

Though hiring and economic growth in the United States remain soft, the Fed is widely expected this week to slow the pace of its bond purchases. Its purchases of Treasury and mortgage bonds have been designed to keep long-term loan rates low to get people to borrow and spend and invest in the stock market.

Most economists expect the Fed's initial move to be small – a reduction in monthly purchases from $85 billion to $75 billion.

One reason: The Fed for months has been preparing markets for such a move. Fed officials wouldn't likely want to raise further uncertainty by failing to meet the very expectations they had raised.

Another factor: Some Fed officials don't think the bond purchases are doing much good anymore. And they feel that by continuing to flood the financial system with cash, the Fed might be raising the risks of high inflation or dangerous bubbles in assets like stocks or real estate.

Some had once expected a sharper first reduction in the Fed's purchases of around $20 billion a month. But that was before the government said that job growth was only modest in August and that employers added many fewer jobs in June and July than previously thought.

MARKET REACTION

Investors' response to a pullback in purchases is expected to be mild if the Fed announces a reduction of only around $10 billion a month. That's especially true if it balances its action by underscoring its commitment to keep short-term interest rates low well into the future.

The Fed has kept its benchmark for short-term rates at a record low near zero since December 2008. And it has said it expects to keep it there at least until the unemployment rate falls to 6.5 percent – as long as the inflation outlook remains mild.

The unemployment rate is now 7.3 percent. Many economists do not expect it to reach 6.5 percent until late 2014 or early 2015.

Even then, Bernanke has said the Fed might decide to keep its short-term rate at a record low, especially if unemployment has dropped because more people have stopped looking for work. The government doesn't count people as unemployed once they stop looking for a job.

To stress its commitment to keep short-term rates low as long as necessary, the Fed may tweak the language in the statement it will issue Wednesday. It might say that a decline in inflation would cause its benchmark rate to remain near zero longer than expected. One Fed official has also suggested lowering the unemployment threshold for any short-term rate increase to 5.5 percent from 6.5 percent.

Any such changes would give investors more assurance that short-term rates will remain low for many more months. All things considered, many economists don't expect the first Fed rate hike to occur before 2015.

FED COMMITTEE VACANCIES

Bernanke's chair is one of several that will need to be filled in coming months. In fact, the Fed's policy panel will have only 10 voting members at this week's meeting instead of the normal 12. One board member, Elizabeth Duke, left in August. Another, Sarah Bloom Raskin, has been nominated by Obama for the No. 2 job at Treasury and won't take part in the meeting.

In addition, the term of a third board member, Jerome Powell, expires in January. And a fourth, Jeremy Stein, must decide whether to remain at the Fed or return to his teaching post at Harvard by May.

Also, among the 12 regional Fed presidents, Sandra Pianalto, head of the Cleveland Fed, has announced that she will step down early next year.

Obama hasn't said publicly whom he might choose to fill those vacancies. Some published reports have suggested that Lael Brainard, Treasury's undersecretary for international affairs, is under consideration for one of the open board seats.

The many vacancies are sure to raise questions about the Fed's future course of policy.

AFTER BERNANKE

Bernanke's second four-year term as chairman expires Jan. 31, and he's made clear he isn't interested in another term. The speculation over who will succeed him has been Washington's favorite guessing game this summer. The two leading candidates had been former Treasury Secretary Lawrence Summers and current Fed Vice Chair Janet Yellen.

But in a surprise, Summers announced Sunday in a letter to President Barack Obama that he wished to remove himself from consideration for the job. Financial markets rallied Monday. Many investors had feared that if Obama chose Summers, who was thought to be his first choice, it could lead to a protracted Senate confirmation battle and perhaps raise doubts about the Fed's commitment to low rates.

About one-third of Senate Democrats had written to Obama, urging him to pick Yellen. Summers was opposed by liberals for his support as Treasury secretary of bank deregulation measures seen as contributing to the 2008 financial crisis.

Critics also felt that Summers' abrasive management style wouldn't work in the Fed's typically collegial atmosphere. A Fed chairman represents one of 12 votes on policy and must build consensus among a diverse group of board members and regional bank presidents with sometimes conflicting views.

Yellen, the highly respected No. 2 official at the Fed, is seen as likely to get the nomination now. But analysts said a dark horse candidate can't be ruled out. One could be former Treasury Secretary Timothy Geithner, who is personally close to Obama. Yet Geithner has said repeatedly that he isn't interested in the Fed job.

Yellen's supporters have argued that with so many vacancies to fill, her experience on the Fed board as vice chair and before that as president of the Fed's San Francisco regional bank, would be a crucial asset for the Fed's chairmanship.

Also on HuffPost:

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  • Myth: The Fed actually prints money.

    <a href="http://www.foxbusiness.com/industries/2012/08/17/chance-fed-printing-more-money-jumps-to-60/">People commonly say</a> that the Fed itself prints money. It's true that the Fed is in charge of the money supply. But technically, <a href="http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html">the Treasury Department prints money on the Fed's behalf</a>. Asking the Treasury Department to print cash isn't even necessary for the Fed <a href="http://www.huffingtonpost.com/2012/03/21/federal-reserve-profit-2011_n_1369354.html">to buy securities</a>.

  • Myth: The Federal Reserve is spending money wastefully.

    Both CNN anchor <a href="http://www.huffingtonpost.com/2012/08/31/cnn-erin-burnett-federal-reserve-stimulus_n_1848210.html" target="_hplink">Erin Burnett</a> and Republican vice presidential nominee <a href="http://thinkprogress.org/economy/2012/09/07/813011/paul-ryan-jobs-qe/" target="_hplink">Paul Ryan</a> have compared the Federal Reserve's quantitative easing to government spending. But <a href="http://www.huffingtonpost.com/2012/03/21/federal-reserve-profit-2011_n_1369354.html">the Federal Reserve actually has created new money</a> by expanding its balance sheet. <a href="http://www.huffingtonpost.com/2012/03/21/federal-reserve-profit-2011_n_1369354.html">The Fed earned a $77.4 billion profit</a> last year, most of which it gave to the U.S. government.

  • Myth: The Fed is causing hyperinflation.

    <a href="http://krugman.blogs.nytimes.com/2011/12/15/inflation-predictions/" target="_hplink">Some</a> <a href="http://www.businessinsider.com/niall-ferguson-has-been-wrong-on-economics-2012-8" target="_hplink">conservatives</a> <a href="http://www.businessinsider.com/ron-paul-is-putting-on-a-great-show-right-now-in-front-of-bernanke-2012-2">have claimed</a> that the Federal Reserve is causing hyperinflation. But inflation is actually at <a href="http://www.nytimes.com/2011/09/18/sunday-review/the-facts-on-the-fed.html" target="_hplink">historically low levels</a>, and there is no sign that is going to change. <a href="http://www.bls.gov/news.release/cpi.nr0.htm" target="_hplink">Core prices have risen</a> just 1.4 percent over the past year, according to the Labor Department -- below the Federal Reserve's <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20120831a.htm" target="_hplink">target of 2 percent</a>.

  • Myth: The amount of cash available has grown tremendously.

    <a href="http://www.nytimes.com/2011/02/10/business/economy/10fed.html?_r=1">Some Federal Reserve critics claim</a> that the Fed has devalued the U.S. dollar through a massive expansion of the amount of currency in circulation. But not only is inflation low; <a href="http://www.businessinsider.com/the-animated-gif-of-boy-throwing-money-out-of-the-window-is-not-a-metaphor-for-qe-2012-9">currency growth also has not really changed</a> since the Fed started its stimulus measures, as noted by Business Insider's Joe Weisenthal.

  • Myth: The gold standard would make prices more stable.

    <a href="http://www.businessinsider.com/ron-paul-is-putting-on-a-great-show-right-now-in-front-of-bernanke-2012-2">Rep. Ron Paul (R-Tex.) has claimed</a> that bringing back the gold standard would make prices more stable. But prices actually were much less stable under the gold standard than they are today, as <a href="http://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/"><em>The Atlantic's</em> Matthew O'Brien</a> and <a href="http://www.businessinsider.com/why-conservatives-like-the-gold-standard-2012-8">Business Insider's Joe Weisenthal</a> have noted.

  • Myth: The Fed is causing food and gas prices to rise.

    <a href="http://www.huffingtonpost.com/2012/09/08/erin-burnett-federal-reserve_n_1866971.html">CNN anchor Erin Burnett claimed in September</a> that the Federal Reserve's stimulus measures have caused food and gas prices to rise. But many economists believe global supply and demand issues are influencing these prices, not Fed policy. And <a href="http://www.huffingtonpost.com/2012/09/08/erin-burnett-federal-reserve_n_1866971.html">there actually is no correlation between the Fed's stimulus measures and commodity prices</a>, according to some economists Paul Krugman and Dean Baker.

  • Myth: Quantitative easing has not helped job growth.

    <a href="http://www.forbes.com/sites/michaelpento/2012/05/01/why-higher-inflation-destroys-jobs/">Some Federal Reserve critics</a> claim that the Fed's stimulus measures have destroyed jobs. But <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20120831a.htm">the Fed's quantitative easing measures actually have saved or created more than 2 million jobs</a>, according to the Fed's economists. In addition, JPMorgan Chase chief economist Michael Feroli told Bloomberg last month that <a href="http://www.bloomberg.com/news/2012-09-10/bernanke-proves-like-no-other-fed-chairman-on-joblessness.html" target="_hplink">QE3 will provide at least a small benefit</a> to the economy.

  • Myth: Tying the U.S. dollar to commodities would solve everything.

    <a href="http://articles.nydailynews.com/2012-08-16/news/33236684_1_monetary-policy-inflation-currency-debasement">Rep. Paul Ryan (R-Wis.) has proposed</a> tying the value of the U.S. dollar to a basket of commodities, in an aim to promote price stability. But <a href="http://www.theatlantic.com/business/archive/2012/08/forget-paul-ryans-budget-his-scariest-idea-is-about-the-federal-reserve/261066/">this actually would cause prices to be much less stable</a> and hurt the U.S. economy overall, as <em>The Atlantic's</em> Matthew O'Brien has noted.

  • Myth: Ending the Fed would make the financial system more stable.

    <a href="http://www.amazon.com/End-Fed-Ron-Paul/dp/B004IEA4DM">Rep. Ron Paul (R-Tex.) claims</a> that ending the Federal Reserve and returning to the gold standard would make the U.S. financial system more stable. But <a href="http://www.bloomberg.com/video/should-the-u-s-return-to-the-gold-standard-wsDVrOKATTqyTaG5yBY1kQ.html">the U.S. economy actually experienced longer and more frequent financial crises and recessions</a> during the 19th century, when the U.S. was using the gold standard and did not have the Fed.

  • Myth: The Fed can't do anything else to help job growth.

    <a href="http://www.nytimes.com/2011/07/31/business/economy/whats-with-all-the-bernanke-bashing.html">Many</a> <a href="http://www.guardian.co.uk/business/economics-blog/2012/jun/27/federal-reserve-runs-out-of-options">commentators</a> have claimed that there simply aren't any tools left in the Fed's toolkit to be able to help job growth. But <a href="http://www.bloomberg.com/news/2012-07-09/fed-harms-itself-by-missing-goals-stevenson-and-wolfers.html">some economists</a> <a href="http://www.boston.com/bostonglobe/ideas/articles/2011/08/28/the_i_word/">have noted</a> that the Fed could target a higher inflation rate to stimulate job growth. <a href="http://economix.blogs.nytimes.com/2012/04/25/bernanke-on-what-the-fed-can-do/">The Fed, however, has ruled this option out</a> -- for now.

  • Myth: The Fed can't easily unwind all of this stimulus.

    <a href="http://www.salon.com/2012/09/01/ben_bernanke_speaks//">Some commentators</a> <a href="http://seekingalpha.com/article/161203-fed-unwinding-won-t-be-easy">have claimed</a> that the Fed can't safely unwind its quantitative easing measures. But the Fed's program involves buying some of the most heavily traded and owned securities in the world, Treasury and government-backed mortgage bonds. The Fed will likely have little problem finding buyers for these securities, all of which will eventually expire even if the Fed does nothing. But <a href="http://economistsview.typepad.com/timduy/2012/09/plosser-opposes-the-1933-37-expansion.html">economists have noted</a> that once the Fed decides it's time to unwind the stimulus, the economy will have improved to such an extent that this won't be an issue.