There's a new sheriff at the Federal Reserve and, on Tuesday, he is widely expected to give the green light to yet another hike in interest rates. The presumptive move, the 15th meeting in a row since the central bank started raising rates in June 2004, would take the Fed's key rate to 4.75%.

But what happens after -- which the Fed will likely signal in its accompanying statement -- is anyone's guess.

That's especially true after Friday's news of a plunge in new-home sales in February. The slowdown in housing, the motor of the U.S. economy over the past few years, has been monitored very closely to determine when the central bank will call it a day.

"Bernanke has indicated that he and the Fed are looking at a broad array of indicators," says John Lonski, chief economist at Moody's Investors Service and a veteran Fed watcher. "But on balance, the data from housing will prove to be decisive."

That also seemed to be the market's thinking as of Friday. While the market was pricing in 100% odds of a rate hike next week, odds of a move to 5% in May fell to 79% on Friday from 94% the previous day, according to Miller Tabak. The market still sees a 92% chance that the fed funds rate will stand at 5% at the June meeting, which implies a pause in May. Odds of a 5.25% funds rate in June dropped to 0% from 6%.

It takes a while for a slowdown in the housing market to have a meaningful impact on the economy. But then again, Bernanke and the Fed probably don't want to fine-tune monetary policy too much, according to Lonski.

"They don't want to repeat the mistake of Greenspan, who pushed rates to 6.5% in 2000 as clearly, that was a mistake," he says. "If they go to 5%, they can say 'we've achieved neutrality for now, let's see what happens.'"

The idea that the Fed will eventually go on pause, if only to resume rate hikes later this year if conditions warrant, seems to be gaining ground among Fed watchers.

Clearly, Bernanke didn't signal diminishing resolve to hike rates during a speech last week to the Economic Club of New York. The new Fed chairman dismissed the idea that the bond market was forecasting an economic slowdown, or worse. Long-dated Treasury yields have been below short-term ones -- creating an inverted yield curve -- several times this year. This historically has served a harbinger of an economic slowdown, or even recession, as it did in 2000.

Yet in his speech Monday night, Bernanke said he "would not interpret the currently very flat yield curve as indicating a significant economic slowdown to come."

On the contrary, he said that longer-term rates are declining because investors are less worried about the long-term economic outlook, the effect of which "is financially stimulative and argues for greater monetary policy restraint, all else being equal."

The yield of the 10-year Treasury bond is used to benchmark mortgage rates and it has started rising over the past month or so. But at 4.67%, the yield is still little changed from where it stood in June 2004, when the Fed first started raising rates.

According to Lonski, the housing market is not so much being hit by rising bond yields as by the fact that potential homebuyers couldn't afford high home prices.

Meanwhile, the lag between the slowdown in housing and its impact on the broad economy -- via retail sales and other economic indications -- will take several months to determine.

That means Bernanke -- who has promised more transparency in explaining the thinking behind monetary policy -- is likely to signal that the Fed's monitoring of economic data will be even more intense than before.

According to Ethan Harris, chief economist at Lehman Brothers, the focus in the statement's language Tuesday will be on whether the Fed keeps the phrase "some further policy firming may be needed." The phrase was put in place late last year to suggest that the end of the road for rate hikes might be in sight.

"If Fed members drop that sentence, it would support the 'one and done' crowd out there," Harris says. "But I think it's very unlikely. Even if they were to pause in May or June, they don't want the market to be too confident that the Fed is done for good."

Harris, who expects the Fed will hike to 5.5%, says that underlying economic strength remains intact, as seen in strong jobs reports and industrial numbers in recent months.

Furthermore, apart from housing, asset markets -- including bonds, stocks and the corporate credit markets -- have all pretty much ignored the Fed's rate hikes thus far. " The Fed want(s) to get some respect, and to see some asset classes cool off," Harris says.

In that context, the market's cat and mouse game with interest rate expectations in recent weeks isn't playing into the hands of fewer rate hikes. Stock and bond market bulls have been cheering every time economic data have come on the weaker side, hoping that the Fed will be out of the way after next week.

Some, if not many traders, will be very disappointed if the Fed signals it might stick around for a little longer.