Updates with mid-session trading

By Shashwat Chauhan and Purvi Agarwal

March 20 (Reuters) - Latin American markets slipped on Thursday after the U.S. Federal Reserve's signal that it was in no hurry to cut interest rates pushed up the dollar, while concerns about the health of the U.S. economy persisted.

Fed Chair Jerome Powell said on Wednesday the Trump administration's initial policies, including extensive import tariffs, appear to have tilted the U.S. economy toward slower growth and at least temporarily higher inflation.

Still, Fed policymakers still expect the central bank to deliver two quarter-percentage-point rate cuts by the end of this year, matching their projection in December.

"It's probably a bit of a combination of one day profit-taking and a little bit of maybe a stabilization of the dollar after the Fed move yesterday," said Malcolm Dorson, head of EM Strategy at Global X.

Dorson said LatAm markets have had a "fantastic run" so far this year on the back of weakness in the dollar, rising commodity prices and some softening in U.S. President Donald Trump's tariff rhetoric from what was previously expected.

Brazil's real BRL= weakened 0.4% overshadowing the central bank's decision to raise interest rates by 100 basis points for the third consecutive time, as expected, and signaling a smaller rate hike at its next policy meeting.

"Brazil is facing a similar but more drastic situation as the Fed, slowing growth but a rising inflation outlook. The central bank is going to have a hard time going forward," said Brad Bechtel, global head of FX at Jefferies.

Mexico's peso MXN= weakened 0.4%. The country's economy likely fell 0.7% in February from the same month a year earlier, a preliminary estimate showed.

Chile's peso CLP= was the biggest decliner, down 1.1%, set to snap a five session win streak, as copper prices retreated after touching multi-month highs. Colombia's peso COP= dropped 0.5%, hitting its lowest in over six weeks earlier in the session.

Colombian President Gustavo Petro has tapped German Avila Plazas as the country's new finance minister, a source told Reuters, after the former minister Diego Guevara announced his resignation amid clashes over budget cuts.

News of Guevara stepping down earlier this week had sent the peso down more than 1% against the dollar.

The broader gauge of Latin American currencies .MILA00000CUS slipped 0.4%, while stocks .MILA00000PUS fell 0.8%, both on track to snap a six-session gaining streak.

Brazil's Bovespa .BVSP slipped 0.4%, bogged down by losses in industrials and utilities, and was set for its first single-day decline in seven.

Elsewhere, South Africa's rand ZAR= remained under pressure, down 0.2% despite the country's central bank pausing its rate-cutting cycle.

Turkey's lira TRYTOM=D3 appreciated 0.1% after hitting a record low of 42 in the last session after the country's central bank hiked its overnight lending rate to 46% in an interim monetary policy committee meeting.

Turkish assets were hit hard on Wednesday after authorities detained President Tayyip Erdogan's main political rival.

In Venezuela, a report said the Trump's administration is considering a plan to extend Chevron's CVX.N license to pump oil in the country.

HIGHLIGHTS

** Brazil's Minerva vows to cut debt after paying for large acquisition

** Brazil's Haddad says recession not needed to bring inflation down

** Mexico's northern state to receive $3.7 billion investments, minister says

Key Latin American stock indexes and currencies:

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Sharon Singleton and Deepa Babington)

((Shashwat.Chauhan@thomsonreuters.com;))