In a new forecast, the Fed slightly upgraded its growth outlook, projecting that the economy would expand at a solid pace of 2.8% to 3.2% next year, up from 2.2 to 2.3% this year.

Fed officials now see the nation's unemployment rate dropping to as low as 6.3% by the end of next year and returning to a normal rate in the mid-5% range by 2016.

Fed policymakers, however, continue to be concerned about inflation, not that it would rise but that it might actually drift lower.

Price growth is running well below the Fed's annual target of 2%, raising the risk of deflation, a condition of falling prices that depresses investments and hiring and is very difficult to cure.

Fed officials project inflation will start moving back toward its long-term target as economic growth picks up in the U.S. and globally. But Bernanke warned: "If inflation does not show signs of returning to target, we will take appropriate action."

On the whole, Bernanke stressed that the economy "has much farther to travel."

"The recovery clearly remains far from complete," he said in his final scheduled news conference, part of an effort he began in 2011 to improve communications with the public.

Fed Vice Chair Janet L. Yellen, who is expected to be confirmed as his replacement by the Senate this week, will take over after Bernanke's term ends Jan. 31.

Bernanke said he did not rush a decision to taper before he left office and that he consulted with Yellen on Wednesday's move, as he has with her on previous actions. "She fully supports what we did today," Bernanke said.

Analysts had said it was a toss-up whether the Fed would vote to taper at the meeting, with many betting that policymakers would wait until the first three months next year. Either way, economists predicted the reductions would be small.

The Fed said it would reduce its purchases of mortgage-backed securities to $35 billion a month, from $40 billion, and reduce its purchases of Treasury securities to $40 billion, from $45 billion.

The stimulus program, which began in September 2012, has helped swell the Fed's asset holdings, or balance sheet, to about $4 trillion. Five years ago, it was well below the $1-trillion mark. The Fed had launched a similar bond-buying program in March 2009 as the Great Recession was coming to an end, officially. It lasted a year and added $1.75 trillion to the Fed's holdings. A second program, lasting seven months to June 2011, added $600 billion.

Analysts worry that the Fed's expanding balance sheet could cause instability in financial markets and that miscalculations in selling bonds could trigger sharp reactions in financial markets.

Wednesday's vote to start reducing bond purchases was 9 to 1. Eric Rosengren, president of the Federal Reserve Bank of Boston, dissented, saying he believed the reduction was premature, given the "still elevated" unemployment rate.