"Stocks and bonds do not like the prospect, which appears somewhat short-sighted given what it means about firming growth and therefore earnings as well as how long the Fed is likely to remain a major player in the interest rate market," said Andrew Wilkinson, chief economic strategist at Miller Tabak.

"Bernanke explicitly reaffirmed that its bond-buying process should continue to exert downside pressure to bond yields thus supporting the economic recovery," he added.



In a decision eyed with a surgeon's precision on Wall Street, the central bank's Open Market Committee tiptoed around the vaunted "tapering" question, saying it will continue watching the economy for more gains.

The Fed itself more or less met market expectations for this week's meeting, though some traders thought it would lay out a groundwork that could lead to at least a modest tightening of its $85 billion a month bond-buying program by September.



Bernanke said scale-backs in the asset purchasing program will only happen if the economic data gets better. Interest rate hikes, he said, are a separate issue and "still far in the future."

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While the Fed's economic forecast indicated some mild optimism for growth, Bernanke said investors shouldn't read too much into that in terms of Fed policy.

"If you draw the conclusion that I've just said that our purchases will end in the middle of next year, you've drawn the wrong conclusion, because our purchases are tied to what happens in the economy," he said.

In other matters, Bernanke refused to address questions about his future at the Fed as his second term winds to a close. President Barack Obama caused a stir this week when he said the chairman had stayed on longer than he intended.

The Fed statement changed little from the May meeting, though it did sound a modestly upbeat note on the economy.



"We pretty much have a Fed statement and summary of economic projections that leave us believing what we believed yesterday, which is the Fed is going to taper at some point, maybe at the end of this year, maybe in 2014," said Art Hogan, managing director at Lazard Capital Markets.