Doubts about the central bank's ability to expand its bond-buying program have driven Treasury yields higher.

Criticism of the Federal Reserve's latest bond-buying program, both from insiders and from U.S. politicians, is muting the plan's potential benefits for the economy.

Amid widely publicized skepticism about the efficacy and wisdom of the bond buying, investors and traders are questioning whether the Fed would be able to expand its bond purchases beyond $600 billion—even if inflation continues falling and unemployment remains high. Those doubts have contributed to an increase in yields on U.S. Treasury bonds since the Fed announced the program on Nov. 3, they say.

The criticism "has raised questions about the Fed's ability and resolve to control the yield curve," said Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, the bond-fund giant. "The criticism has unsettled markets naturally inclined to worry about the politicization of the Fed and its loss of autonomy," he said.

The success of the latest round of quantitative easing, or QE2 as it is known, hinges on shaping public and market expectations. The more the public and investors believe the Fed is likely to keep buying bonds to depress long-term interest rates until the economy comes back, the more likely the markets are to keep long-term rates from rising.

Communicating a willingness to do more bond buying if needed despite dissent from inside the Fed and political pressure, primarily from Republican politicians and their advisers, is proving a challenge for Fed Chairman Ben Bernanke and a policy-setting committee with a diverse set of views.