US Fed extends taper, tips growth lift

The US Federal Reserve's Federal Open Market Committee (FOMC) has announced a further $US10 billion cut to the central bank's bond-buying program after a two-day policy meeting in Washington.

The central bank also said it had spotted signs of a pick up in economic activity during the past month after GDP numbers for the first quarter today came in below expectations.

The Fed's latest 'taper' is its fourth straight, with the move bringing the bond-buying program back to $US45bn a month, almost half where it was when the first reduction was announced in December.

At its peak the program injected $US85bn a month into the US economy.

"The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labour market conditions," the FOMC statement read.

"In light of the cumulative progress toward maximum employment and the improvement in the outlook for labour market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases."

The central bank again informed the market that rates would remain at record lows even when the bond-buying program ends, which at this point appears likely at either the October or December FOMC meeting.

"To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate," the statement said.

"The Committee continues to anticipate ... that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 per cent longer-run goal, and provided that longer-term inflation expectations remain well anchored."

The release of the monetary policy statement came just hours after official data showed the US economy had scarcely grown in the first quarter. The meagre 0.1 per cent lift in quarterly GDP was a surprise to most, with analysts tipping a 1 per cent lift.

However, the Fed said it remained confident in the growth trajectory of the US economy.

"Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions," the FOMC said.

"Labour market indicators were mixed but on balance showed further improvement."