To show an audience just how big an amount $1 trillion is, former President Ronald Reagan once described it as a stack of $1,000 bills stretching 67 miles into the air.

With $1 bills, a more familiar denomination to many consumers, that would be 67,000 miles, or about one-fourth the distance between the Earth and its moon.

By that gauge, the Federal Reserve balance sheet that mushroomed to $4.5 trillion with securities purchases intended to buoy the economy after the financial crisis would more than bridge the gap the U.S. space program relied on rockets to overcome.

But it's not the size of that balance sheet or the likelihood that the U.S. central bank will announce a timetable for shrinking it on Wednesday, Sept. 20, that's captivating Wall Street. Instead, say economists at New York-based Goldman Sachs Group Inc. (GS) , it's the comparatively vanilla question of whether the monetary policy committee will follow through on the rate hikes it has signaled through 2019.

While starting to wind down the massive portfolio of government debt and mortgage-backed securities accumulated during so-called quantitative easing "is a significant occasion," Goldman economist Jan Hatzius wrote in a note to clients," the Fed has already communicated extensively about its long-prepared plan for a gradual and predictable runoff."

Consequently, markets are likely to focus instead on whether slowing inflation will prompt the central bank to slow hikes that began just two years ago -- after almost a decade of near-zero rates -- and have so far nudged them to just 1% to 1.25%. The question has heightened relevance since growth has not only stubbornly lagged the central bank's 2% target, it appears, based on some measures, to be narrowing.

Personal spending excluding food and energy -- one of the central bank's preferred inflation gauges, tightened 20 basis points to 1.4% in July compared with March, the government noted at the end of August.

"Several Fed officials have expressed greater concern that the recent decline might be more than just a blip," Hatzius wrote, citing the effects of e-commerce and technological shifts that have hurt brick-and-mortar stores, spurring layoffs, and enabled factories to use machines for increasingly complex tasks once handled by humans.

While Chair Janet Yellen and monetary policy committee vice chairman William Dudley president have been reluctant to back away from the Fed's goal of gradually removing the easy-money policies that followed the 2008 crisis, they are losing a reliable ally with the departure of Stanley Fischer, a Fed governor who's stepping down next month.

That might leave the panel with just eight members unless the Senate confirms Randy Quarles, nominated to fill an earlier vacancy by President Donald Trump. And it could affect the path of interest rates, which the Fed has signaled it might increase a third time this year, followed by three more increases each in 2018 and 2019

Further clouding the picture is the impact of Hurricanes Harvey and Irma, which struck Texas and Florida, respectively, spurring as much as $17 billion in flood-insurance claims. The Fed is likely to note the damage, though it won't necessarily block a December hike, said Brett Ryan, a senior U.S. economist with Deustche Bank AG (DB) .

The Fed raised interest rates 25 basis points less than a month after Katrina struck New Orleans in 2005.
The Fed raised interest rates 25 basis points less than a month after Katrina struck New Orleans in 2005.

The central bank did, after all, raise interest rates 25 basis points less than a month after Hurricane Katrina barreled into New Orleans in August 2005, causing catastrophic damage.

But for now, Ryan said, the Fed wants to focus on its balance sheet, which policymakers plan to shrink by gradually reducing the amount of maturing securities reinvested in the portfolio. 

To avoid spooking financial markets, the central bank has said it will cap the rolloff at $10 billion a month initially, then raise the limit by the same amount every three months until it reaches $50 billion. Goldman previously projected the Fed will ultimately shrink its balance sheet by just $1.1 trillion, or about 25%, a process that would take until late 2020.

The bank, like Deutsche, said Yellen is unlikely to indicate on Wednesday any shift from the rate hike on the table for December. Trading in interest-rate futures indicates a 53% chance of an increase then.

"They don't have enough information yet to start rethinking their forecast, and the hurricanes' impact on upcoming data makes it really difficult to start changing things," Ryan said. "In that scenario, where you don't want to confuse the market any more, you just keep everything the same."

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