By Sam Goldfarb and Sebastian Pellejero

U.S. government bond yields rose in a volatile session Thursday after the Federal Reserve formally said it would let inflation run hotter but didn't commit to buying more longer-term Treasury debt.

Yields, which rise when bond prices decline, initially fell after Fed Chairman Jerome Powell said central bank officials unanimously approved a new approach of making up for periods of low inflation by seeking subsequent periods of higher inflation.

The implications of the announcement weren't immediately clear for bond investors. The Fed's long-telegraphed strategy means the central bank will likely leave short-term interest rates near zero for years to come, an outcome that by itself should support demand for Treasurys. At the same time, higher inflation erodes the purchasing power of bonds' fixed payments, potentially making longer-term bonds less appealing.

Following their initial drop, bond yields turned higher as investors focused on the less supportive aspects of the Fed's policy, analysts said.

Aiding the move: the Fed didn't commit to buying more longer-term Treasurys as part of its inflation strategy. That disappointed some investors who are concerned that the Fed's current purchases could be overwhelmed by a deluge of new debt entering the market as the federal government funds efforts to revive the economy.

"Even though Powell formally announced the new policy regime, he didn't tell us how the Fed plans to achieve an average 2% inflation target," said Donald Ellenberger, senior portfolio manager at Federated Hermes. The lack of commentary regarding bond purchases was key in driving a wider gap between long and short-term bond yields, he said.

Adding more uncertainty for investors, Mr. Powell said officials were being purposely vague about the length of time that inflation needs to average 2% before they raise rates. That left room for significantly different policy choices, from quickly raising rates after inflation exceeds 2% to waiting years to do so.

"The market would've liked for the Fed to give a target for when the central bank would act, but Chairman Powell stopped short of that," said Kevin Giddis, chief fixed income strategist at Raymond James Financial.

Investors, though, were being cautious Thursday, preparing for any development that could hurt bond prices. By the end of the session, the yield on the benchmark 10-year U.S. Treasury note had climbed to 0.744%, from 0.686% Wednesday.

The 30-year bond yield rose even more, jumping to 1.499% from 1.406% a day earlier. The 10-year break-even rate, a measure of investors' annual inflation expectations derived from the difference between the nominal 10-year yield and the yield on the 10-year Treasury inflation-protected security, ticked up to 1.745%, from 1.739% at Wednesday's close.

Other investments tied to interest rates also whipsawed. The WSJ Dollar Index, which measures the U.S. currency against a group of others, initially declined, then reversed course and rose 0.1%.

Gold prices climbed after Mr. Powell's announcement but then declined, with futures for August delivery settling down 1% at $1,921.60. Expectations for ultralow interest rates have helped carry the metal to fresh highs recently and it struggles to compete with yield-bearing investments when rates rise.

Write to Sam Goldfarb at sam.goldfarb@wsj.com and Sebastian Pellejero at sebastian.pellejero@wsj.com