"Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the 2 percent objective over the medium term", the central bank said in its statement.
On Wednesday, the Fed announced it would begin the reductions next month based on a plan approved in June.
The New Zealand dollar rose above 73 U.S. cents as financial markets await the outcome of the Federal Reserve policy meeting tomorrow and ahead of local balance of payments and economic growth data in the next two days.
The Fed's plan is to get rid of a modest $US10 billion worth of those assets each month to start with, ramping up to $US50 billion in a year's time.
An additional effort to boost growth involved purchasing trillions of dollars' worth of bonds.
One more increase to range between 1.25 and 1.50 percent is likely before the end of the calendar year, which is about a quarter-point increase over the central bank's current benchmark.
"There is a bit of a disconnect between the market and the Fed", he said.
Japan's Nikkei 225 index was up 1.72 percent just after midday.
Of course, the Fed can also alter its interest rate policy, so a second key part of today's announcement is to examine the pace at which FOMC participants expect rates to rise. The median FOMC member is indicated in a darker shade.
NAR said existing home sales slumped by 1.7 percent to an annual rate of 5.35 million in August after tumbling by 1.3 percent to a rate of 5.44 million in July.
Market watchers had been expecting interest rates to remain steady.
In commodity markets, oil prices edged lower.
Other signals point to a healthier economy.
As per official predictions quoted in reports the unemployment level is expected to stay near the four per cent mark for at least the next three years.
Some traders and investors had thought the Fed might have struck a more dovish tone given the potential economic impact of recent severe hurricanes and still sluggish inflation. Set against the recent hawkish shifts by the European Central Bank (ECB) and now the Bank of England (BoE), the Fed is lacklustre by comparison.
The main factor for the yen this week would not be the growing geopolitical tensions between the United States and North Korea, rather it is Japanese Prime Minister Shinzo Abe, who is considering of announcing an election as early as next month.
"When you combine the excellent communication (from the Fed) and the small nature of the initial unwind, right now the market knows what's coming, I expect there to be no real response". "With US yields creeping up, the dollar-yen is creeping up", said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in NY. "Historically, first term presidents renominate sitting Fed chairman".