TREASURIES-US yields extend fall after Fed flags inflation, unemployment risks

NEW YORK, May 7 (Reuters) - U.S. Treasury yields extended their fall on Wednesday after the Federal Reserve held interest rates steady, as expected, but noted the risk of higher inflation and unemployment has increased.

"Uncertainty about the economic outlook has increased further," the Federal Open Market Committee said at the end of a two-day meeting, during which officials agreed unanimously to keep the central bank's benchmark interest rate steady in the 4.25%-4.50% range.

The benchmark 10-year yield US10YT=RR fell further to 4.261%, down 5.4 basis points after the Fed statement. The two-year yield US2YT=RR, which reflects interest rate expectations, slid 2.5 bps to 3.768%.