Peter Schroeder and Vicki Needham write:  With an interest rate hike looming, the Federal Reserve’s credibility is on the line.

Chair Janet Yellen has professed unflinching confidence in the Fed’s ability to steer policy back to normal. That confidence will now be put to the test as the central bank sifts through a pile of economic data to find the right time to act

The big question at the Fed is when to pull the trigger on the first interest rate increase since 2006.

Yellen has said “policymakers cannot wait until they have achieved their objectives to begin adjusting policy.”

“Doing so would create toogreat a risk of significantly overshooting both our objectives … potentially undermining economic growth and employment,” she warned.

And while the unemployment rate is one of the most prominent measures of economic health, the Fed has to rely on many other pieces of competing data to form the most complete picture it can.

The unemployment rate used to be the only number you had to look at. Now of course there are many dimensions.

How smoothly Yellen is able to steer through the first interest rate hike in nearly a decade could significantly affect the brewing debate in Congress about altering how the Fed operates.

For years, Republicans have criticized the Fed’s extremely accommodative policy, arguing it is sowing the seeds of damaging inflation and encouraging bad habits in financial markets.

Diane Swonk, chief economist of Mesirow Financial, said Yellen and Fed officials are cognizant of the political pressure as they try to lay a path for a smooth series of rate increases.

That pressure stems from the Fed’s move to stop the collapse of AIG and Lehman Brothers as the 2008 financial crisis took hold.

“The Fed has zero experience with doing what they’re doing right now because they’ve never done it before,” said Andrew Busch, editor of the political and financial newsletter The Busch Update.

Historically, Busch said, the Fed has acted late. The concern now, he said, is that the Fed will ultimately get too aggressive and go too far.

Prominent Republicans in both chambers have indicated that they will pursue some form of Fed reform, whether it be tying the bank to a formal monetary policy rule, changing the number of Fed districts nationwide or reforming how the system is audited.

If an interest rate increase leads to havoc in financial markets, it could lead to some “I told you so” from Fed skeptics who have criticized its decisions for years.

At its last policy meeting, the Fed updated its policy statement to remove language saying it would be “patient” in raising rates. At a subsequent press conference, Yellen emphasized that the change did not suggest a rate hike was imminent but that the central bank was beginning to monitor the landscape for the appropriate moment to do so. She ruled out a rate hike when the Fed next sets policy in April.

Like Bernanke, Yellen has exuded steadfast confidence in the Fed’s ability to raise rates without disrupting the overall economy. But now her reputation as an expert among experts will be put to the test.

Some  Fed-watchers believe the reform chatter will remain just that, because many policymakers ultimately will want to leave the steering of the economy to an independent central bank.