The Federal Reserve is expected to stick to its highly accommodative monetary policy when it wraps up a two-day meeting on Wednesday, with high unemployment constraining enthusiasm about an improving economy.

Officials at the U.S. central bank, who resumed their meeting at 9 a.m. (1400 GMT), have welcomed data pointing to renewed growth but are not sufficiently convinced about the recovery's sustainability to tighten borrowing conditions.

The Fed slashed benchmark interest rates close to zero a year ago and has undertaken a host of emergency lending measures to deal with the worst financial crisis in generations.

With the economy expanding again, investors are wondering when and how quickly the Fed will begin to wind things down.

Policymakers are leery of pulling the plug too quickly due to the weak labor market and tight lending conditions, making it unlikely a statement at the close of their meeting around 2:15 p.m. (1915 GMT) will signal any policy changes.

The latest inflation figures made the job easier. Consumer prices rose 0.4 percent in November, but were flat excluding food and energy, the government said on Wednesday. That tamped down inflation jitters spurred by a report on Tuesday showing a surge in prices at the wholesale level.

Given what's come out between now and the November 4 (Fed) meeting, it doesn't seem like the statement really requires any significant changes, said Conrad DeQuadros, senior economist at RDQ Economics in New York.

PERSON OF THE YEAR

Fed Chairman Ben Bernanke, who has come under fire for failing to spot the financial crisis ahead of time, has taken an increasingly public role in defending the central bank's record.

On Wednesday, Bernanke earned some reprieve as Time Magazine said it had named him Person of the Year. He told the magazine bank lending remained too weak to support a healthy recovery.

Just two weeks ago, Bernanke faced a stiff grilling from the Senate Banking Committee in a hearing on his nomination to a second term as chairman.

In a written response to questions posed by Republican Senator Jim Bunning, Bernanke argued the U.S. economy is operating so far beneath its potential that inflation is unlikely to become a problem soon.

The bulk of the evidence indicates that resource slack is now substantial, Bernanke wrote in the letter, which was made public on Tuesday. I continue to expect slack resources, together with the stability of inflation expectations, to contribute to the maintenance of low inflation in the period ahead.

The Fed's statement on Wednesday could offer a nod to a recent improvement in economic data, particularly in light of a considerable deceleration in the pace of job losses last month.

Even so, analysts suspect the Fed will not yet overturn its commitment to keep rates at an exceptionally low level for an extended period.

(Reporting by Pedro Nicolaci da Costa; Editing by Neil Stempleman)

Inflation Energy Ben Bernanke