* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Adds analyst comments, updates prices) MILAN, June 17 (Reuters) - Euro zone government bond yields rose on Thursday after a Federal Reserve’s more hawkish than expected policy meeting that brought forward the first projected U.S. rates increase. Thirteen out of 18 policymakers foresaw a “liftoff” in borrowing costs in 2023 instead of 2024, with 11 of them seeing two increases of 25 basis points. Seven officials see rates moving higher next year, opening the possibility of even more aggressive action. Fed Chair Jerome Powell said there had also been initial discussions about pulling back on the Fed’s bond purchases. This conversation would be completed in the coming months as the economy continues to recover. “With inflation elevated, the decision of tapering will depend mainly on job growth in the months ahead,” said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management. “Regarding the timing of rate hikes, inflation may be the deciding factor,” he added. Germany’s 10-year government bond yield, the benchmark of the bloc, rose 2 basis points to -0.18% by 1419 GMT, after briefly hitting its highest since May 25 at -0.149%. U.S. two-year yields jumped to one-year highs on Thursday, while long-dated Treasury yields fell following sharp yield increases on Wednesday. On the other hand, yields of euro zone shorter maturities rose less than those of long maturity bonds. Unicredit analysts said they felt rather comfortable with their “year-end target of 2% for the 10Y U.S. yield.” They also see a steady but slower rise in Eurozone government bond yields, “which translates into further UST-EGB (U.S. Treasury yield versus Eurozone government bond yields) spread widening.” The Fed’s projections showed that U.S. inflation is now on track to exceed the Fed’s 2% target by a wide margin of 3.5% this year and remains slightly elevated for the next two years. According to Deutsche Bank analysts, “if zero was that you thought current U.S. inflation was totally transitory and that 100 meant that we were likely to see very high inflation, then before last night’s FOMC, the Fed seemed to be at around a 5.” After the meeting, it is “somewhere between 10-20,” they said, adding Fed’s position “makes more sense now.” Periphery bond prices, which move inversely with yields, underperformed core bonds as they have benefited most from the ultra-accommodative monetary policy to avoid the pandemic’s adverse economic impact. Italy’s 10-year BTPs yield rose 6 basis points to a one-week high at 0.835%. Semi-core government bond yields, such as France’s 10-year OAT rose 3.5 bps to 0.17%. Reporting by Stefano Rebaudo, Editing by Raissa Kasolowsky Our Standards: The Thomson Reuters Trust Principles.