All eyes in Washington may be focused on fiscal cliff negotiations, but for a couple of hours today it is worth diverting one’s eyes to the other end of the city. It’s Fed day!

The Federal Open Market Committee concludes a two-day meeting Wednesday, and it will be a busy afternoon for Fed watchers. At 12:30, the FOMC issues a statement announcing the results of its meeting, at 2:00 the committee releases its latest forecast for growth, employment, and inflation in the years ahead, and at 2:15 Chairman Ben Bernanke begins a news conference.

You got questions, I got answers. (AP Photo/J. Scott Applewhite)

For most of the last two years, fiscal policy has been seemingly paralyzed, political leaders unable to reach agreement on much in the way of either short-term stimulus for the economy or a long-term strategy to bring down deficits. Bernanke and the Fed, meanwhile, have been the activists in town, unveiling a series of innovative approaches to try to push more money into the economy and bring down joblessness.

That may be changing. Congress and the Obama administration are in talks to avert the fiscal cliff, which could lead to a major breakthrough toward a new fiscal policy. And rather than unveil some grand new strategy, the Fed looks likely to continue on the course it outlined in September, of buying longer-term bonds at a pace of $85 billion a month until it sees some real improvement in the unemployment rate or greater risk of inflation.

So there probably will be no bombshells in the Fed’s announcements Wednesday. But that doesn’t mean there is no news. Here are five things to watch for.

Bonds, bonds, bonds. The Fed’s program of selling off shorter-term bonds and buying longer-term bonds is set to expire Dec. 31. The problem: There aren’t many shorter-term securities left on the Fed’s books to sell. But with the expiration of Operation Twist, as it is called (because it aims to twist the yield curve), the central bank looks very likely to start buying extra long-term securities outright, using newly created money, to keep up its total of $85 billion in purchases per month. Thus far the Fed has been buying $40 billion in mortgage backed securities a month and buying $45 billion in Treasury bonds through the twist. Now it’s probably just going to be buying $85 billion in a mix of both types of securities outright, expanding its balance sheet even faster.

But what kind of bonds? There has been some speculation that the Fed could shift even more of its purchases toward mortgage backed securities, instead of Treasury bonds, in a bid to push mortgage rates down still further. It is a tricky question for the Fed: On one hand, helping a housing rebound establish itself could reap major benefits for the economy, on the other, it would mean the Fed’s monetary policy was essentially favoring housing over other sectors of the economy, which is more fiscal policy than monetary—a no-no in Central Banking 101. For that reason, they appear more likely to focus the additional new purchases on traditional Treasuries rather than shift to an even more mortgage-focused approach to bond buying.

What’s the threshold? Among top Fed leaders, a debate has heated up in the last few months over whether to announce specific levels of unemployment and inflation that would lead the central bank to consider ending its ultra low interest rate policies. There are a lot of practical problems, such as the fact that policy is always about lots of different indicators of the economy and the Fed doesn’t want to suggest it is only paying attention to two. The debate probably hasn’t ripened enough within the committee for the 12:30 p.m. statement to contain explicit language to that effect (if it were to happen, it would be a surprise and would be the big headline out of the meeting). But in the press conference, be on the lookout for softer versions of the same approach. Reporters could do the world a favor by asking Bernanke questions like “what would you consider the 'substantial improvement in labor markets' that might lead to tighter policy?" or “Would you tolerate it if inflation went a quarter point above the usual 2 percent target at a time joblessness was still high.” His answers may give hints as to what the effective thresholds are, even if there is no formal announcement.

What kind of year is 2013 going to be? Bernanke has said that he thinks 2013 could be a “very good year” for the economy if lawmakers resolve the fight over the fiscal cliff amicably. Now we’ll get some solid numbers of what that might mean, in the form of Fed leaders’ official projections on GDP and unemployment for next year and beyond.

What’s our potential? Those forecasts also include the Fed's estimates of the longer-term levels of unemployment, GDP growth, and inflation it is aiming for. In the case of inflation, that is purely a judgment of the FOMC as to what it thinks constitutes “stable prices” (the answer, is around 2 percent). The other two, though, reflect a judgment of what the U.S. economy is capable of.  Those guesses have been stable lately, at 5.2 to 6 percent for unemployment and a 2.3 to 2.5 percent rate of GDP growth. Any change in those numbers would indicate an evolution of Fed thinking on the United States’s economic potential.