* Euro zone periphery government bond yields tmsnrt.rs/2ii2Bqr
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)
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