In the US session CPI, Building Permits, Housing Starts and Industrial Production figures were released. The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.2% in February on a seasonally adjusted basis, in line with market forecasts. The energy index continued to decrease and was the major cause of the seasonally adjusted decline in the all items index, more than offsetting increases in the indexes for food and for all items less food and energy. The gasoline index fell sharply, declining 13.0%, and the indexes for fuel oil and electricity also decreased, though the index for natural gas rose. 

 

The Commerce Department says housing starts rose 5.2% last month to a seasonally adjusted annual rate of 1.18 million units. Construction had fallen 3.4% in January and 1.4% in December, declines that had been blamed in part on winter weather. Applications for building permits, a gauge of future activity, fell 3.1% to an annual rate of 1.17 million units after a flat reading in January and a 6.1% drop in December. The decline in building permits, unless reversed, could signal future trouble in an industry that was a bright spot for the economy last year.

 

Industrial production decreased 0.5% in February after increasing 0.8% in January. Analysts were predicting 0.2% decrease. Sizable declines in the indexes for both utilities and mining in February outweighed a gain of 0.2% for manufacturing. The output of utilities dropped 4.0%, as unseasonably warm weather curbed the demand for heating. Mining production fell 1.4% and has decreased nearly 1.3% per month, on average, over the past six months.

 

However, the focus of the session was on FOMC interest rate decision. The Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation. In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation.

 

“The committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen,” the FOMC said. “However, global economic and financial developments continue to pose risks.” “A range of recent indicators, including strong job gains, points to additional strengthening of the labor market,” the FOMC said. The Fed reiterated that the “stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”

 

From Eurozone, tomorrow, Final CPI data will be released, but should show no change from prelim reading. In the US session Unemployment Claims, Philly Fed Manufacturing Index and Current Account figures will be published. Analysts predict increase to 267,000 in Unemployment Claims, and decline in Philly Fed Manufacturing Index to -1.4. Current Account deficit should narrow to $117 billion.

 

Figures to watch:

 

Final CPI (Thursday 11:00)

Unemployment Claims (Thursday 13:30)

Philly Fed Manufacturing Index (Thursday 13:30)

Current Account (Thursday 13:30)