Investors were expecting the Fed to raise rates three times this year but will be looking for any indications that four increases may be likely as inflation rises and on expectations of stronger economic growth.

A key focus is whether Jerome Powell adopts a more hawkish tone in his first meeting as Fed chairman than predecessor Janet Yellen and whether Fed officials change their projections for future rate increases, which is known as the "dot plot."

"I get the sense that the market's getting a little ahead of itself," said Subadra Rajappa, head of US rates strategy at Societe Generale in New York.

"If you look at the data we've been getting for the last quarter, as well as for the fourth quarter, the growth data's relatively weak," Rajappa said. "It feels little bit premature for the Fed to guide markets towards four hikes this year. It can do that in June if they wanted to, if the data between now and then improves."

Two-year note yields, which are highly sensitive to interest rate policy, jumped to 2.357 percent, the highest since September 2008. Benchmark 10-year note yields increased to 2.900 percent, the highest since March 12.

A jump in consumer prices in January increased expectations for four rate hikes this year, though February's consumer price index last week showed prices cooled in that month.

The ballooning US trade deficit as the government also plans to increase budget spending is also expected to weigh on growth. Data on Wednesday showed that deficit widened to $128.2 billion in the fourth quarter.

"The recent trade data that we got show huge deficits, which is going to feed into first-quarter GDP," Rajappa said.

Investors are also focused on how international countries respond to US plans to impose trade tariffs.

Yields briefly dipped earlier on Wednesday after the Wall Street Journal reported that China is planning countermeasures against US trade tariffs.