After months of careful guidance, the Federal Reserve signalled on Wednesday it was to begin the mammoth task of unwinding its balance sheet in October, while also signalling that it still expects to raise interest rates one more time this year.
The US central bank's Federal Open Market Committee (FOMC) held its main Fed funds rate at a range between 1%-1.25%, retaining an "accommodative" stance that it expects will support further strengthening of the labour market and a return to its target rate of inflation at 2%.
The policy statement said that the Fed would begin to reduce its balance sheet in October.
It's plans for policy normalisation were set out at June's FOMC meeting. It will decrease reinvestment of the principal payments it receives from securities held in the System Open Market Account.
On its Treasury holdings it will decrease first by $6bn per month, increasing in steps of $6bn at three-month intervals until reaching $30bn per month.
On its holdings of agency debt and mortgage-backed securities by $4bn initially, then increasing by $4bn in three-monthly steps until reaching $20bn a month.
One more hike in 2017?
Economic growth in the US has remained relatively robust into the third quarter, according to certain survey measures and hard data such as industrial and manufacturing production.
US economic data is likely to be affected in the coming weeks, however, by the impact of two hurricanes in the southern US - most notably in the oil producing region of the Mexican Gulf and the state of Texas.
While the Fed admitted storm-related disruptions would have a short-term impact, it said it did not expect the Hurricanes Harvey and Irma would "materially alter the course of the national economy over the medium term".
Given the Fed made no mention of any likely divergence from its expected path of three rate increases this year, most took this to mean a December rate hike remained likely.
"The Fed has firmly signalled that a December rate rise is still on the table, but it will be hard for investors to put too much faith in this forecast while there is still plenty of time for it to change its mind," said Luke Bartholomew, investment strategist at Aberdeen Standard Investments.
Reasons for any caution at the Fed is persistently low inflation and, indeed, the Fed lowered its inflation forecast.
The core personal consumption expenditure (PCE) price deflator, the Fed's favoured measure of consumer price rises, rose by an annual 1.4% in July, down from 1.5% in the prior month. The Fed now sees PCE at 1.9% at the end of 2018, down from a previous forecast of 2%.
The consumer price index, used as the main rate of inflation in most countries, rose to 1.9% in August from 1.7% in July.
Dollar bulls welcomed the statement and pushed the US currency higher. The dollar index, a measure of the greenback against a basket of its main rivals, rose 0.4% to 92.17.
Against the euro, the dollar climbed 0.7% to $1.1916 and versus sterling the dollar was flat at $1.3509.
Stocks failed to gain much traction, however, leaving the Dow down 0.2% and the S&P 500 down 0.1%.