Treasuries Advance After Fed Maintains Stimulus, Cites Inflation

Treasuries rallied, reversing earlier losses, after the Federal Reserve failed to indicate when it will reduce the pace of the $85 billion a month in monetary accommodation it has used to buy bonds since January.

U.S. 30-year bond yields fell from an almost two-year high as policy makers led by Fed Chairman Ben S. Bernanke said persistently low inflation could hamper the expansion. Any slowdown in purchases remains linked to signals of sustained economic gains, the Fed said. Treasuries fell earlier as U.S. output grew 1.7 percent in the second quarter, the Commerce Department said, exceeding a 1 percent forecast. The unemployment rate dropped to 7.5 percent in July, according to the median forecast of 83 economists in a Bloomberg News survey before the Aug. 2 report.