* Sterling sinks after BoE minutes, decline in wage growth
* Dollar steady as Fed meeting winds up
* Most assume Fed will drop "patience" in step toward tightening
* Focus on any comments on dollar, FOMC rate projections
By Patrick Graham
LONDON, March 18 (Reuters) - Sterling fell as the Bank of England waded into the debate over the relative value of major currencies on Wednesday, warning about its impact on inflation before a Federal Reserve meeting that may yet do the same.
Some 24 central banks have eased monetary policy this year in a bid to bolster their economies, often aiming explicitly to weaken their currencies to aid local exporters and push up inflation.
The pound and the dollar have been the exceptions, up 20 and 25 percent respectively against baskets of currencies used to measure their broader strength.
So while the Fed is widely expected to take a step toward raising interest rates for the first time in almost nine years on Wednesday, analysts also say it may add a warning about the dollar's impact on inflation.
The dollar was broadly flat in morning trade. Sterling, however, dived by around 0.8 percent against the euro and dollar.
"It appears the BoE is joining the currency wars and this all paints a grim picture for sterling versus the dollar," said Nick Beecroft, Senior Market Analyst at Saxo Bank in London.
"The (policy meeting) minutes reveal a committee that is increasingly concerned about sterling's strength and the possible implications for trade and inflation. UK base rates are going nowhere."
After another surge for the U.S. currency in the past two weeks, markets have largely priced in the Fed dropping its reference to patience on policy, clearing the way for a rate hike as early as June.
Anything less, or an explicit warning from the Fed that the dollar's strength may slow it down on policy moves, would be likely to provoke a sharp retreat by the dollar, although analysts are split on which currencies would benefit most.
"The most crowded positions are short euros, or short Scandinavian currencies, so if we don't get the removal of the `patience; language it would be the dollar against that Europe bloc which would see the most dramatic moves," said Michael Sneyd, a strategist with BNP Paribas (Xetra: 887771 - news) in London.
"Our base case is that they will remove `patience'. If we get that and a measured message on the dollar's impact on inflation, then, given the slight retracement we have seen in the first half of this week, I think the dollar will do well."
The euro inched up to $1.0609, having failed to sustain a modest bounce to $1.0651 overnight. Support was seen at $1.0551 ahead of the 12-year trough of $1.0457. The pound traded at $1.4643 and 72.46 pence per euro.
The Fed's statement is due at 1800 GMT, followed half an hour later by a press conference with Chair Janet Yellen. The central bank will also release members' forecasts for inflation and interest rates, and some analysts suspect the trajectory of future increases could be lowered. (Editing by Larry King)