Riskier assets continued to move higher after the US Federal Reserve decided to keep interest rates unchanged, and also stated that rates would remain low for an extended period of time. The S&P 500 Index moved higher by 9.2 points touching a new 52 week high at 1159.5.
The Fed’s statement following the March meeting was nearly identical to January’s remarks. The central bank continues to see economic improvement and expects to scale back emergency programs, but makes no signal that rates are going to rise in the near term. The Federal Reserve said it will end one of its main support programs for the U.S. economy, the purchases of $1.25 trillion of mortgage backed securities.
In economic news in the US, Housing starts decreased by 5.9% to a seasonally adjusted 575,000 annual rate compared to the prior month, according to the Commerce Department. While this was the biggest decline in four months, it followed an upward revision in the previous month’s data, when starts staged a 6.6% gain. January starts were originally reported up 2.8%. February’s homebuilding activity remained above the level of 573,000 registered in December. Economists surveyed forecast a 4.7% drop in February housing starts, to an annual rate of 563,000. Building permits, an indication of future construction, fell 1.6% to a 612,000 annual rate. Economists had expected permits to decline 3.1% to a rate of 603,000. January permits fell 4.7% to 622,000.
In Europe, Greece avoided a downgrade to its credit rating by Standard & Poor’s Ratings Services, which had warned last month that it was considering such a move, although the ratings firm slapped on a negative outlook. S&P credit analyst Marko Mrsnik said the Greek government’s plans to reduce its deficit was supportive of the nation’s current triple-B-plus long-term credit rating, which is three notches into investment-grade territory.