The U.S. Federal Reserve says the national economy is strengthening and it will cut its monthly bond purchases by an additional 10 billion dollars.

Starting in February, the Fed will buy 65 billion dollars in bonds per month, down from the current 75 billion. The Fed has also reaffirmed its plan to keep short-term rates at record lows.

This was Ben Bernanke's final policy meeting before he steps down Friday after eight years as chairman of the Federal Reserve.

Many investors fear that reduced Fed bond buying will boost U.S. rates and cause investors to move money out of emerging markets and into the United States for higher returns.

U.S. stocks were down as much as one percent in volatile trading on Wednesday following the Federal Reserve's decision.