* U.S. dollar index about flat on day

* Sterling ticks higher on surprise inflation surge
(Updates prices, market activity, comments to U.S. market open;
previous LONDON)

By Saqib Iqbal Ahmed and Elizabeth Howcroft

NEW YORK, June 16 (Reuters) – The dollar was little changed
on Wednesday as traders awaited the conclusion of a U.S. Federal
Reserve meeting in which investors will be looking for any sign
of response from central bank policymakers to the jump in U.S.

The Fed concludes its policy meeting later in the day and
will release new economic projections along with a policy
statement at 2 p.m. EDT (1800 GMT).

The central bank is widely expected to acknowledge the first
conversations among its policymakers about when and how quickly
to pare back the massive bond-buying program launched in 2020,
but most investors think the Fed will refrain from any hints of
starting tapering its stimulus in the near future.

The U.S. Dollar Currency Index, which measures the
greenback against a basket of six currencies, was 0.014% lower
at 90.52. The index hit a one-month high on Tuesday after data
pointed to higher inflation.

“The USD remains narrowly mixed to slightly softer ahead of
the Fed meeting, with the major currencies essentially holding
in established ranges,” Shaun Osborne, chief currency strategist
at Scotiabank, said in a note.

Market participants will be listening to the news conference
after the Federal Open Market Committee (FOMC) meeting for any
change in tone from Fed Chair Jerome Powell about whether
inflation is likely to be temporary or longer-lasting.

“We see no major changes in the policy outlook, with
disappointing jobs data precluding the Fed from declaring that
it is making substantial progress towards its objectives and
paving the way for a tapering in asset purchases,” Osborne said.

“Tweaks to the statement and projections will have to
recognize higher inflation,” Osborne said.

While there may be some “talk about talking about tapering”
and some further shift in expectations of rate hikes in 2023,
Osborne said he does not expect the market to be greatly

Risk-sensitive currencies were slightly higher, with the New
Zealand dollar up 0.38% at $0.7146 and the Australian
dollar – which is seen as a proxy for risk appetite – up 0.3% at

Sterling strengthened against the dollar on Wednesday after
data showed British inflation unexpectedly jumped above the Bank
of England’s 2% target in May, sparking some concerns that
policymakers may start signaling a shift in policy thinking if
prices shoot up further.

Meanwhile, bitcoin’s recent rally appeared to run
out of steam, as the world’s largest cryptocurrency fell 2.72%
to $39,078.38.

(Reporting by Saqib Iqbal Ahmed in New York and Elizabeth
Howcroft in London; Editing by Alison Williams, Will Dunham and
Alex Richardson)