Jan 27 (Reuters) - New Zealand shares extended declines on Monday to hit their lowest level in over a week while investors took a cautious stance ahead of the crucial U.S. Federal Reserve meeting, due later in the week.

New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.3% to 12,986.16 points as of 2208 GMT, hitting its lowest level since Jan. 16.

The index is also on track to log its second consecutive session of losses.

Markets in Australia were closed for a public holiday. The S&P/ASX 200 index .AXJO ended 0.4% higher on Friday.

On Friday, the U.S. Dow Jones Industrial Average .DJI fell 0.32%. The S&P 500 .SPX lost 0.29% while Nasdaq .IXIC lost 0.50%.

Market participants now await the Fed's rate decision, expected on Wednesday, with traders betting that the world's most influential central bank would stand pat at its Jan. 28-29 meeting.

Investors worry that U.S. President Donald Trump's proposed tariffs could exacerbate inflationary pressures and slow Fed rate cuts, after he referred to trade policy multiple times this week without providing concrete details of his plans. .N

A slower rate cut by the Fed would add pressure on other central banks, including the Reserve Bank of New Zealand which has cut its official cash rate by 125 basis points since August.

Last week, data showed inflation was within the central bank's target range in the fourth quarter, keeping the door ajar for further rate cuts.

On the bourse, Air New Zealand AIR.NZ gained 0.8% while A2 Milk ATM.NZ shed 0.5%.

Power company Meridian Energy MEL.NZ fell 0.5% and Fisher & Paykel Healthcare FPH.NZ declined 1.3%.

(Reporting by Rajasik Mukherjee in Bengaluru; editing by Diane Craft)

((Rajasik.Mukherjee@thomsonreuters.com))