NEW YORK (MarketWatch) -- Treasury prices edged higher on Wednesday, pushing yields down slightly, before the Federal Reserve is expected to end its policy meeting by continuing its commitment to keep interest rates low for some time.
Though its assessment of the economy is likely to be upgraded, analysts see little chance of any steps that the Federal Reserve is moving towards removing some of its ultra-accommodative monetary policies and programs.
"The Fed is certain to recognize the improving economic landscape while emphasizing the ongoing excess capacity and headwinds that continue to face the economy," said John Spinello, Treasury strategist at Jefferies & Co., one of the 18 primary dealers that trades directly with the Fed.
Yields on 10-year notes (UST10Y 3.56, -0.02, -0.56%) declined 2 basis points to 3.57%, after touching on Tuesday the highest level since August. A basis point is 0.01% and yields move in the opposite direction to prices.
Two-year-note yields (UST2YR 0.83, -0.02, -2.23%) fell 1 basis point to 0.85%, after reaching the highest since early November in the prior session.
The Federal Open Market Committee is expected to end its monetary policy meeting and release a statement at 2:15 Eastern time. See more on Fed meeting.
Officials are expected to keep intact the key phrase from November's meeting: that economic conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
Treasurys were briefly buoyed by data showing consumer inflation remains very muted. The Labor Department's core consumer price index, excluding food and energy, was flat in November, keeping the year-over-year number at 1.7%. That statistic, closely watched by the Fed, is the first positive number since February. See more on CPI.
A separate report showed housing starts rose to a 574,000 pace in November. See story on housing starts.
