TREASURIES-Yields rise before Fed meeting statement

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Yields rise ahead of Fed's rate decision and economic projections

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Focus on potential changes to SLR and quantitative tightening policies

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Traders watch U.S.-Russia negotiations and reciprocal tariff rates

By Karen Brettell

NEW YORK, March 19 (Reuters) - U.S. Treasury yields gained on Wednesday and two-year yields hit a three-week high before the Federal Reserve is expected to keep rates on hold and policymakers are due to update their economic and interest rate projections.

Investors will focus on whether Fed officials have soured on the economic outlook as uncertainty about the implementation and impact of trade tariffs dents consumer sentiment.

Comments by Fed Chair Jerome Powell after the Fed's rate decision will also be key. Powell earlier this month said the U.S. central bank is in no rush to cut rates as inflation remains above its 2% annual target.

A possible early end, taper or pause in quantitative tightening will also be watched after minutes from the Fed's January meeting showed that Fed officials were considering slowing or pausing the program.

Any new information regarding a review of the Supplementary Leverage Ratio (SLR) will also be a key focus for bond traders. A change in this policy would mean that large U.S. banks would not need to set aside as much extra capital to hold Treasuries, likely boosting demand for the debt.

"For today people would be looking for tweaks to the SLR that could potentially come out or anything regarding QT, whether they slow it sooner or not," said Dan Mulholland, head of rates - trading and sales at Crews & Associates.

The yield on benchmark U.S. 10-year notes was last up 2.5 basis points on the day at 4.306%.

The 2-year note yield, which typically moves in step with interest rate expectations, rose 4 basis points to 4.082%, the highest since February 27.

The yield curve between two-year and 10-year notes flattened by around two basis points to 22 basis points.

Aside from the Fed, traders are watching for any new information regarding U.S. President Donald Trump's plans to introduce reciprocal tariffs on April 2.

"Things could change with respect to negotiations and/or concessions made by either side. But I think with nothing changing, he's going to go through with that," said Mulholland.

Peace talks to end the Russia-Ukraine war also remains a focus for market participants.

Russia and Ukraine accused each other on Wednesday of violating a new agreement to refrain from attacks on energy targets, with scores of drone strikes launched hours after U.S. President Donald Trump spoke by phone to Russia's Vladimir Putin.

(Reporting By Karen Brettell, Editing by Franklin Paul)