U.S. investors are looking for clear signals from Federal Reserve policy makers, who have lately shown signs of disarray, policy analysts said.
"There's just a bunch of wildly different views being presented from both inside and outside of the Fed, and that is confusing markets," The Washington Post quoted Bank of America-Merrill (NYSE:BAC) Lynch economist Ethan Harris as saying.
Fed Chairman Ben Bernanke "needs to overcome this idea that the Fed is paralyzed," he said.
Diane Swonk, chief economist at Mesirow Financial said Bernanke's style of encouraging open debate was "a good thing in general."
However, "It brings confusion to financial markets rather than clarity," she said.
The growing confusion is marked by increasingly vocal dissent within the ranks of the Fed's Open Market Committee. Federal Reserve Bank of St. Louis President James Bullard has said the economy is in danger of slipping into a deflationary trend marked by lower prices, which stalls the economy.
Taking the opposing viewpoint, Kansas City Fed President Thomas Hoenig has said leaving lending rates at historically low levels makes inflation a greater risk than deflation.
Underlying these arguments is the growing belief that the Fed has limited options to re-invigorate a stalled economic recovery.
Observers will be looking for a signs of a clear policy direction during Bernanke's speech at the Fed's annual retreat in Wyoming Friday, the newspaper said.
