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The Federal Reserve said on Wednesday it will continue reducing its stimulus package and changed its view on when interest rates will rise.

Despite a seemingly dovish tone, markets recoiled at remarks from Fed chief Janet Yellen, who said interest rate increases likely would start six months after the monthly bond-buying program ends.

Fed tapers by $10 billion

March 19, 201401:31

Stocks tumbled as Yellen spoke, with the Dow at one point sliding more than 200 points before recovering somewhat. Short-term interest rates rose appreciably, with the five-year note moving up 0.135 percentage points. The seven-year note tumbled more than one point in price.

In moves widely anticipated by financial markets, the Fed Open Market Committee voted to reduce the pace of its monthly asset purchase program by $10 billion to $55 billion.

Also, the FOMC amended language that previously indicated the U.S. central bank's key policymaking body would begin to consider raising interest rates once the national unemployment rate hit 6.5 percent. The new change gives the Fed leeway in deciding when to hike rates regardless of where the jobless number, currently at 6.7 percent, gyrates.

The moves mark the first key decisions from the Fed since the ascent of Yellen, formerly the vice chair and head of the Fed's San Francisco branch. She takes over for Ben Bernanke, whose eight years at the helm marked a historically easy approach to monetary policy that has seen the central bank balance sheet balloon past $4.2 trillion.