WASHINGTON — The argument for the Federal Reserve to introduce another round of stimulus, and its reason for hesitation, can both be summarized by a single number: 3.53 percent, the average interest rate last week on a 30-year mortgage.
The cost of mortgages and other kinds of loans remain well above zero, a chief reason that many Fed officials are confident the central bank still has some power to increase the pace of economic growth by continuing to reduce interest rates.
But those rates also are lower than they ever have been before, raising questions about how low they can go, and about the eventual consequences of such huge and enduring distortions to the normal workings of the financial marketplace.
Top Fed officials are coming to the conclusion that the economy is not growing fast enough to reduce the nation's high rate of unemployment, and several members of the Fed's policy-making committee have said additional action is needed if the economy is "stuck in the mud," as Ben Bernanke, the Fed chairman, has said.
The question vexing officials as the committee prepares to meet Tuesday and Wednesday is whether the available actions would do more good than harm.
"They repeatedly say that they have additional tools to use, but they haven't done it," said Tim Duy, a professor of economics at the University of Oregon. "That leads one to believe that they're not particularly confident in the tools that they have."
The concerns are focused on the most aggressive option available to the Fed, a further expansion of its investment portfolio. They fall into two broad categories: Is the Fed disrupting markets by removing assets from circulation? And, in reducing interest rates, is the Fed pulling on a rubber band that could snap back quickly and painfully, sending those same rates soaring with disruptive consequences?
In part because of those concerns, Fed officials have said that they want to be sure of the need for additional action before they decide to make the attempt.
"I don't think they should be launched lightly," Bernanke said of asset purchases at a June news conference. "There should be some conviction that they're needed."
Bernanke controls the Fed's decisionmaking process, but he is unlikely to act without the support of a significant majority of the 11 other officials who hold votes on the committee. Some Wall Street analysts have concluded that the Fed is unlikely to act before its September meeting, once it has seen data on job creation in July and August.
The Fed already is engaged in a huge campaign to reduce borrowing costs for businesses and consumers. The policies, along with a weak economy that has reduced demand for loans, have helped to push a wide range of borrowing costs to the lowest levels on record.
In addition to the low level of mortgage rates, investors effectively are paying the federal government for the privilege of financing the national debt.
Borrowing costs for companies with good credit fell to an average of 3.04 percent Wednesday, the lowest level on record, according to an index compiled by Bank of America Merrill Lynch. Rates have dropped 22 percent this year.
The Fed's efforts also have pumped up the stock market and held down the cost of American exports by pushing down the value of the dollar.
The extent of economic benefits from these lower rates remains a subject of considerable debate, but the basic mechanics are clear enough.
Lower mortgage rates, for example, encourage people to buy homes, allow them to afford more expensive homes and let existing homeowners refinance. The benefits do not directly reach homeowners who are underwater or borrowers who cannot qualify for loans. But the Obama administration estimates that refinancing alone has saved homeowners about $27.7 billion over the last three years.