The Federal Reserve's program to reduce the bonds it holds on its balance sheet will end in six months, in a move being closely watched by financial markets.

In an announcement Wednesday following its two-day meeting this week, the central bank said that in May it will begin tapering the amount of proceeds it allows to roll off its balance sheet each month.

Under the current program, it is allowing $30 billion in Treasury proceeds and $20 billion from mortgage-backed securities to roll off, while reinvesting the rest.

The amount for Treasurys will drop to $15 billion in May. While technically still allowing the proceeds to roll off from mortgages, the Fed will simply reinvest them in Treasurys.