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 fell further to

4.261%, down 5.4 basis points after the Fed statement. The

two-year yield, which reflects interest rate

expectations, slid 2.5 bps to 3.768%.