* Euro zone periphery government bond yields http://tmsnrt.rs/2ii2Bqr
By Yoruk Bahceli
AMSTERDAM, Sept 17 (Reuters) - German government bond yields
dipped on Thursday after the U.S. Federal Reserve kept interest
rates unchanged, with inflation looking likely to remain subdued
for three years.
The U.S. central bank promised to keep rates near zero until
inflation is on track to "modestly exceed" its 2% target.
New economic projections released with the policy statement
showed most policymakers see interest rates on hold through to
at least 2023, with inflation not breaching 2% over that period.
While U.S. Treasury yields initially rose after the decision
they fell in early Thursday trade and stocks took a
hit. European stocks were set to open the session lower.
"It basically shows that it's hard to please markets that
are used to massive amounts of central bank action," said DZ
Bank rates strategist Christian Lenk.
"I think that that really shows the big point is the Fed is
going to stick to its unchanged ... rate policy until the end of
2023 and well, at the end of the day, this is not enough for
equity markets to cheer."
Safe-haven German 10-year bond yields were last unchanged at
-0.48% after falling about 1 basis point in early trade
. Italian 10-year yields were up 2 basis points at
0.99% after hitting six-month lows on Wednesday.
In Europe, attention is likely to remain on central bank
speakers on Thursday, with European Central Bank board member
Luis de Guindos due to give a speech at 0800 GMT.
Several policymakers have made dovish statements this week,
after the ECB gave an unexpectedly sanguine policy message last
week, while markets were expecting a more dovish tone given the
bloc's negative inflation reading in August and the appreciation
of the euro.
In the primary market, France will raise up to 8.5 billion
euros from bonds due in 2023, 2026 and 2028, and up to 1.25
billion euros from inflation-linked bonds due 2026, 2030 and
2047. Spain will also raise up to 5 billion euros from bonds due
in 2023, 2027, 2041 and 2050.
There is also some focus on the Bank of England's policy
decision, due at 1200 GMT.
(Reporting by Yoruk Bahceli; Editing by Kevin Liffey)