(CNBC) — Stocks closed lower on Wednesday after Federal Reserve’s latest monetary policy announcement hinted at higher inflation ahead.

The Dow Jones industrial average declined 174 points, while the S&P 500 fell 0.7 percent. The Nasdaq composite also dropped 0.4 percent. The major indexes initially popped after the the central bank made its announcement, but sold off sharply in the last hour of trading.

The Fed kept interest rates unchanged, as was largely expected. The central bank’s policymaking committee also noted that “overall inflation and inflation for items other than food and energy have moved close to 2 percent.” That was an upgrade from the March meeting in which the FOMC said the indicators “have continued to run below 2 percent.”