(Updated at 1500 EDT)

By Karen Brettell

May 22 (Reuters) -

U.S. Treasury yields rose on Wednesday after minutes from

the Federal Reserve's latest policy meeting showed central bank

officials were concerned about higher inflation but still had

faith price pressures would ease, if slowly.

The Fed signaled at its April 30-May 1 meeting it is still

leaning toward eventual reductions in borrowing costs but

acknowledged that disappointing inflation readings in the first

quarter could delay those rate cuts.

While the policy response for now would "involve

maintaining" the Fed's benchmark policy rate at its current

level, the minutes released on Wednesday also reflected

discussion of possible further hikes.

"The minutes appear to be a bit more hawkish than what

we heard from (Fed Chair Jerome) Powell at the post meeting

press conference," said Subadra Rajappa, head of U.S. rates

strategy at Societe Generale in New York.

"They clearly seem to be concerned about inflation, they

are much more open to perhaps hiking if needed," Rajappa said.

"This means higher for longer on policy."

Data released since the Fed meeting have shown inflation

cooling in April, with consumer prices rising less than expected

and U.S. job growth also slowing more than expected.

Fed policymakers in recent comments, however, have

emphasized waiting several more months to ensure that inflation

really is on track toward its 2% target before cutting rates.

"April payrolls and April CPI were two good data points for

the rates market. However, the Fed has told us they need a good

amount more data in order to be thinking about actual rate cuts,

which makes sense given how strong the data was in the first

quarter," said Angelo Manolatos, macro strategist at Wells Fargo

in New York.

Fed funds futures traders are pricing in 40 basis points of

cuts by year-end, with the first cut seen possible in September.

With Fed policy now largely data dependent, the market may

be likely to consolidate as it waits for May's jobs data and

inflation readings.

The Fed will next meet on June 11-12 when it will update

its economic and interest rate projections.

Benchmark 10-year note yields were last up 2

basis points at 4.434%

Interest rate sensitive two-year yields

gained 5 basis points to 4.8796%.

The inversion in the yield curve two- and 10-year

maturities widened around 3 basis points to minus

45 basis points, the deepest since April 10.

Yields rose earlier on Wednesday in line with those on

European government debt after data showed that UK inflation

eased less than expected and a key core measure of prices barely

dropped.

British Prime Minister Rishi Sunak also called a national

election on Wednesday for July 4.

The Treasury Department sold $16 billion in 20-year bonds on

Wednesday at a high yield of 4.635%, close to where it had

traded before the auction. The bid-to-cover ratio was 2.51

times, the lowest since February.

The Treasury will also sell $16 billion in 10-year

Treasury Inflation-Protected Securities (TIPS) on Thursday.