Fed Cuts Asset Purchases Amid Inflation Fear
The US Federal Reserve has cut the pace of monthly asset purchases by $10bn (£5.8bn), as it dampens fears of inflation rising.
The Fed said its quantitative easing programme would now be set at $35bn (£20.6bn) a month.
The US dollar weakened against its major rivals as the Fed said it would maintain interest rates at the current low level and not quicken the pace for raising them.
Fed boss Janet Yellen said recent data shows a modest acceleration of inflation, but added that unemployment was still too high.
Speaking at a post-meeting news conference, she said there was "no mechanical formula" for when the Fed will lift rates.
It is expected to maintain benchmark rates at the current level well into 2015, averting a big rise in prices.
Ms Yellen said: "The recent evidence we have seen, abstracting from the noise, suggests that we are moving back gradually over time towards our 2% objective and I see things roughly in line with where we expected inflation to be."
She made the comments at her second news conference since taking over the chair role from predecessor Ben Bernanke.
Despite the negative reaction from foreign exchange markets, equities rallied to a record close as bond prices strengthened.
The Fed reduced its growth forecast for 2014, partially based on the harsh winter that affected US businesses.
A number of household names, including fast food chains, have previously reported first quarter resulted that were dampened by a bitterly cold winter across many parts of the US.