Treasurys slide after the Fed says growth slowdown is 'transitory'

Gold inched up on Thursday, but the yellow metal held near a six-week low hit in the previous session as the dollar remained firm on expectations that the US Federal Reserve may raise interest rates as early as June.

"The Committee views the slowing in growth during the first quarter as likely to be transitory", Fed leaders said in a statement released Wednesday.

But the Fed gave no hint of a pause in its statement, repeating the line that has been in all of its recent declarations: "The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate". The unemployment rate, however, fell to 4.5 percent - marking its lowest level in 10 years. Fed officials have signaled that they expect two more rate hikes this year, in addition to the one increase they made in March.

Most Asian stock markets slipped Thursday after a lackluster day on Wall Street as the Fed used its latest assessment of the USA economy to signal that more interest rate increases are on the way.

While the Fed is not expected to lift interest rates, with policymakers taking note of a recent run of weak indicators, its post-meeting statement will be parsed for clues about its plans for later in the year.

Futures traders are now pricing in a 72 percent chance of a June rate hike, from 63 percent before the Fed's statement, according to the CME Group's FedWatch Tool.

The Federal Reserve has left its benchmark interest rate at a still-low level near 1 percent while signaling that it expects a resilient USA economy and solid job market to justify higher rates later this year.

Consumer spending, which accounts for about 70 percent of the USA economy, increased only 0.3 percent in the first quarter, the smallest increase since the fourth quarter of 2009, according to the department.

The report indicated that economic growth seems to have accelerated at the start of the second quarter after slowing to 0.3% in the first three months of the year.

Most economists have expressed optimism that the economy is strengthening in the current April-June quarter, fueled by job growth, higher consumer confidence and stock-market records. And wages and job growth remain fairly healthy.

The widely expected decision contained no concrete commitment to the timing of the next rate increase.

They also said inflation is running close to their goal of 2 percent. About its balance sheet, the Fed only noted that it was maintaining it strategy of balance sheet reinvestment. The minutes to this policy meeting, which are due to be released May 24, could provide more information on this.

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