The European Central Bank will scale back its quantitative easing program before ending it in December in a move widely anticipated by markets, but warned of "uncertainties surrounding the inflation outlook."

The central bank will cut its monthly asset purchases from €30 billion currently at the end of September to €15 billion for a final three months as it gradually weans the bond market off a €2.5 trillion program introduced in 2015 to rescue the banking sector and stimulate lending.

The euro sank against the dollar, falling 0.5% to $1.1728 as of 8:28 a.m ET, in the aftermath of the announcement as the warning of weaker inflation suggested interest rate rises may be delayed for some time.

In its statement, the ECB noted that interest rates — the other major monetary tool at the bank’s disposal — are set to remain at zero percent, with the deposit facility at -0.40%.

"The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path," the ECB said.

Martin Enlund, chief FX strategist at Nordea tweeted, "Central Bank's forward guidance on rates a bit on the soft side, as guidance indicates hikes unlikely until Q3, 2019 (or later). ECB continuing to buy €15 billion/month in Q4 this year means they did not go cold turkey, which was a hawkish tail risk."

The bank has struggled to meet its inflation target of 2%, with core inflation only up to 1.1% despite stronger economic growth. While the headline CPI rate did hit 1.9% in May, up from 1.2% in April, this has widely been interpreted as a short-term reflection of higher energy costs, exacerbated by a strong dollar.