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NEW YORK: US Treasury yields fell on Wednesday after the Federal Reserve repeated its promise of continued extraordinary support for the economy and kept the size of its bond purchase program unchanged.

Policymakers projected a 6.5% decline in gross domestic product this year and a 9.3% unemployment rate at year's end. The Fed also said it would maintain bond purchases at "the current pace" of around $80 billion per month in Treasuries and $40 billion per month in agency and mortgage backed securities.

"Generally the Fed's signals were in line with expectations," said Jon Hill, an interest rate strategist at BMO Capital Markets in New York. "They acknowledged that unemployment's going to be high, inflation is going to be low and they are going to keep interest rates very low for at least the next two years."

Benchmark 10-year Treasury yields fell 9 basis points to 0.744%. Two-year yields, which are the most sensitive to interest rate changes, fell 3 basis points to 0.177%.

The Fed did not comment in its statement on whether it was likely to undertake yield curve control as part of its efforts to keep rates near zero for the next few years.

Fed Chairman Jerome Powell said in a press conference that the U.S. central bank reviewed yield curve control at the meeting, adding that its effectiveness was still an "open question."

The Fed will make decisions on policies including yield curve control as it gains a better understanding of the economy's trajectory, Powell added.

Expectations that the Fed will cap short-dated Treasury yields has increased demand for trades that benefit from yield curve steepening. Investors are betting that short-term rates will be held down by the Fed's low rate policy, while long-dated debt will be hurt by improving economic expectations and increasing Treasury supply.

The yield curve between two-year and 10-year notes flattened to 57 basis points. It reached 72 basis points on Friday, the steepest since March, after data showed the U.S. economy unexpectedly added jobs in May.

The curve between five-year notes and 30-year bonds was last at 118 basis points, after reaching 129 basis points on Friday, the steepest since December 2016.

U.S. data on Wednesday showed U.S. consumer prices fell for a third straight month in May and underlying inflation was weak

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