The Federal Reserve decided Wednesday to end its quantitative easing stimulus program, after six years of pumping money into the economy via asset purchases to shore up growth.
The Fed also said it would not raise interest rates for "a considerable time" after the end of the QE program, sticking to its timetable of an increase well into 2015.
The two key signals of its monetary policy were expected, as the US central bank pulls away from the era of economic crisis with an economy that is growing steadily, but with some worry about weak inflation.
But the Federal Open Market Committee, in a post-meeting statement, said that the labor market, long a particular concern, had shown "substantial improvement" and underlying strength to continue progressing toward full employment.
For that reason, the FOMC said, it was winding up QE3, its latest stage of purchases of some $3.5 trillion in Treasury bonds and mortgage securities since 2008 to keep interest rates low and encourage investment.
The program has been tapered down from $85 billion a month last December to just $15 billion this month, and economists have said that its impact on overall growth has been less and less.
The Fed`s principal aim for the policy was to help bring down the unemployment rate, which peaked at 10.0 percent in October 2009 and fell steadily to 5.9 percent last month.
With jobs growth now running at a firm clip, the Fed`s focus has turned to inflation, which remains well below its 2.0 percent target.
The FOMC said Wednesday that the economy continues to grow at a "moderate" pace and suggested that low inflation is not too much a worry, saying longer-term expectations "remain stable."
Also key in Wednesday`s statement was the Fed`s signal for interest rates.
The committee had repeatedly stated that the first hike in the benchmark federal funds rate from the 0-0.25 percent level, where it has stood since the end of 2008, would come only "a considerable time" after it ends QE.
In addition, FOMC member surveys have pointed to a rate rise around mid-2015.
But some analysts speculated that, with the program finally wound down, and the economic picture improved, the FOMC might change the language of its statement to allow for an earlier hike.
The language stayed the same, and as usual the FOMC allowed itself room to change course, saying if the economy improved more quickly or more slowly than expected, a rate hike could come sooner, or later.
Analysts said there were no big surprised in the statement, but that it was, "if anything, a more positive tone, at least on the labor market," according to Jim O`Sullivan of High Frequency Economics.
US equity markets showed little net impact: the S&P 500 was off 0.35 percent in mid-afternoon, slightly lower than before the statement release.
But the dollar surged one cent against the euro, to $1.2650 per euro, and the positive lean of the statement sent US Treasury yields higher, the 10-year bond rising to 2.33 percent from 2.29 percent.
