Dollar extends gains after Fed holds rates but projects hike later this year

NEW YORK, June 17 (Reuters) - The U.S. dollar extended gains against the euro on Wednesday, after the Federal Reserve held the benchmark interest rate steady and the Fed's statement showed policymakers expect a hike in borrowing costs later this year amid growing concerns about inflation.

The euro was 0.5% lower against the dollar at $1.1553, while the greenback pared losses against the yen to trade about unchanged on the day at 160.435 yen.

(Reporting by Saqib Iqbal Ahmed; Editing by Chizu Nomiyama)