Shares were steady in major markets yesterday ahead of a policy statement from the Federal Reserve, while the dollar rose broadly as US data pointed to strengthening inflation that could keep the Fed on track to gradually hike interest rates this year.

Underlying US inflation increased more than expected in February, adding to recent readings on the housing and job markets that have raised the probability of a rate increase in June.

Benchmark US Treasury yields rose to their highest in seven weeks and oil prices gained, with Brent above $40 per barrel.

Markets were on tenterhooks ahead of the Fed statement and a press conference with Fed Chair Janet Yellen half an hour later.

The Fed was seen holding rates steady but keeping the door open to resume hikes soon. “A hawkish turn by the Fed could set off a re-pricing of global rates and reverse the recent weakening of the dollar, reintroducing concerns about China (currency) depreciation, lower commodity prices, and credit concerns in the energy sector,” said David Folkerts-Landau, chief economist at Deutsche Bank in London.

Wall Street was little changed in morning trading ahead of the Fed statement, but utilities, which are usually sold when investors expect higher interest rates, were the worst performing sector on the S&P 500. Financials and energy were the ones that rose the most.

The dollar rose broadly after the solid US economic data and the expectation of its effect on the Fed’s decision-making.

The dollar was up 0.4 per cent against a basket of currencies and reversed an earlier slip against the yen to trade 0.5 per cent higher at 113.69 yen. The euro fell 0.4 per cent to $1.1061.