NEW YORK (CNNMoney.com) - Bond prices dipped Tuesday as investors parsed the Federal Reserve's interest rate hike -- to 4.5 percent -- and statement that more hikes "may be needed" as Chairman Alan Greenspan's 18-1/2-year tenure comes to a close.

Long-term Treasury prices recovered to gain slightly overall in late Tuesday trade.

The dollar fell against the euro and yen.

The 10-year note rose two ticks to 99-26/32 to yield 4.52 percent, down slightly from 4.53 from late Monday. The 30-year bond gained 12/32 to 110-5/32, yielding 4.68 percent, down from 4.70 the previous session. Bond prices and yields move in opposite directions.

The two-year note was down one tick, yielding 4.53 percent. The five-year note was also down one tick, yielding 4.46 percent.

The Fed gave a less ambiguous statement than had been expected, while still giving new Chairman Ben Bernanke room to navigate in coming months. (Full story)

The bond market reacted to the Fed's prominent mention of inflation pressures.

Treasury investors fear inflation since it erodes the value of the fixed-income investment.

The statement read: "Although recent economic data have been uneven, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures."

"The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives."

Investors were closely watching the Fed's statement for clues as to future rate hikes, especially after last week's weak GDP report.

Wall Street economists and interest rate futures markets are increasingly expecting the Fed to raise rates to 4.75 percent, but are considerably less clear as to what happens after that.

The quarter-percentage point rate hike Tuesday marked the 14th such increase since the Fed began tightening monetary conditions in June 2004.

Apart from Tuesday's Fed meeting, bond traders will have plenty of economic data to digest this week, with the government scheduled to release its debt issuance plans for the first quarter Wednesday and nonfarm payroll numbers due out Friday.

Treasury prices held steady and barely flinched when the government reported a 0.8 percent increase in the fourth-quarter employment cost index. Economists surveyed by Briefing.com forecast that the closely watched measure of wages gained 0.9 percent in the period.

In currency trading, the euro bought $1.2153, up from $1.2085 late Monday. The dollar bought ¥117.21, down from ¥117.62 in the previous session.

--from staff and wire reports

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The post-Greenspan Federal Reserve. Click here for more.